## Cyprus: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Cyprus

_IMF Staff Country Reports, December 9, 2019_

## Source details

**Canonical URL:** [Cyprus: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Cyprus](https://www.imf.org/en/publications/cr/issues/2019/12/09/cyprus-2019-article-iv-consultation-press-release-staff-report-and-statement-by-the-48863)

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## Bibliographic details
- Published: December 9, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513522036.002

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### Economic outlook and growth projections
- Following a period of very rapid growth in the aftermath of the economic crisis, growth is gradually settling in at a more sustainable but still relatively robust pace despite the external slowdown.
- Output is projected to rise by around 3 percent in 2019–20, supported by construction and services sectors.

### Banking sector, NPLs, and financial stability
- Good progress has been made in addressing domestic and external stability risks arising from legacies of the financial crisis.
- Policies and actions that strengthened bank balance sheets:
  - Sales of nonperforming loans (NPLs).
  - Amendments to the foreclosure and insolvency framework.
  - Resolution of a large systemic bank.
- Risks related to reversing reforms:
  - Reversal of reforms to the foreclosure framework would hinder ongoing NPL resolution efforts and create risks for financial stability.
- Contingent liability and fiscal risk scenario:
  - Realization of contingent liabilities from the still weak banking sector or increased fiscal spending pressures could undermine investor confidence, raising interest costs and depressing growth.

### Policy implications and recommendations
- Cyprus needs to build on recent gains by advancing reforms to:
  - Secure macroeconomic stability.
  - Enhance efficiency.
  - Strengthen productivity and growth potential.

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_Source: https://www.imf.org/en/publications/cr/issues/2019/12/09/cyprus-2019-article-iv-consultation-press-release-staff-report-and-statement-by-the-48863_