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Prodromou: IMF Report Shows that Robust Economic Growth Will Lead to Zero Unemployment

Prodromou: IMF Report Shows that Robust Economic Growth Will Lead to Zero Unemployment

The robust growth of the Cyprus economy will lead to zero unemployment in two years, Government Spokesman Prodromos Prodromos has said, commenting on the remarks made by the International Monetary Fund’s Executive Board which concluded Article IV consultation with Cyprus on November 28th, 2018.

Replying to questions by journalists on Monday, Prodromou noted that the IMF Executive Board approved the report by welcoming the strong - after the crisis - recovery of the Cypriot economy, which at a rate of 4.2% allows for significant fiscal surpluses and leads to a decrease in unemployment.

He added that the IMF welcomed the recent decisions taken by the Cypriot authorities to address vulnerabilities in the banking sector and that they referred to measures that the government has taken as regards the Co-operative Bank.

According to the Cyprus News Agency, Prodromou said that the IMF predicts a GDP growth of 4.2% for this year and 4.1% for 2019 and pointed out that this is important since in its previous reports the IMF predicted a much lower growth rate. 

The Government Spokesman added that IMF also predicts that Cyprus will continue to record significant fiscal surpluses and that by 2023 the public debt will decrease to 70%. 

He also noted that the robust growth path, which is based on investments that we should continue encouraging, has already absorbed more than half of the unemployment, which had reached a peak of 16,3% in the period between 2008 and 2014. He pointed out that while current unemployment stands at 7% it is predicted that by 2020 Cyprus will reach full employment.

According to the IMF, he added, employment will be increased by 3.9% this year and  2.5% next year.

He said that while welcoming the government`s fiscal performance, with a record surplus of 852.8 million between January-October, the IMF notes that fiscal stability policy should be maintained.

The Spokesman said that the government proceeds with a plan which includes many changes and cuts with emphasis on the competitiveness of the Cypriot economy and the improvement of the growth model, so that we continue having positive reports and evaluations by the rating agencies.

As regards the Non-Performing Loans (NPLs), he said that they constitute the biggest problem, but noted that according to the European Commission, Cyprus has recorded the greatest improvement.

Pointing out that Cyprus and Greece are the two countries of the Monetary Union with a high NPL rate, he said that the improvement achieved, following the decisions for the Co-operative, has led to a drastic reduction of the problem.

He added that with other tools, such as legislation and reforms, NPLs should drop further.

Concluding, he pointed out that during the economic recession there was no possibility to absorb NPLs while today, the rapid growth rates create better conditions to address NPLs.

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