A Reality Check
Stockwatch, June 11, 2018
4 Pages Posted: 27 Jun 2018
Date Written: June 11, 2018
Private sector debt in Cyprus remains extremely high five years after the enforced bail-in in 2013. Yet, the Government and the banks in Cyprus continue to define the problem as being only about the non-performing loans (NPLs). The author calls for a reality check and is asking the politicians to face the facts about the true issues affecting the real economy. It is argued that reducing the NPLs in this manner is treating the symptoms not tackling head on the real problem. Selling the loans will not reduce the private debt. On the contrary, it is likely to make private indebtedness a lot worse as the allowed provisions that the banks have been making will be used as discounts to entice private funds to buy them. He poses three crucial reality question and answer facts about the state of the Cyprus Economy and why no progress has been made in this respect.
Keywords: Private debt, repayment capability, credit risk
JEL Classification: D61, G17, G21, G32
Suggested Citation: Suggested Citation