NICOSIA: The economy of Cyprus grew by 1.6 percent in 2015 as the eastern Mediterranean island is preparing to exit a three-year austerity program next month, Finance Minister Harris Georgiades said on Friday.
He said in a statement after meetings of the Eurogroup and the Economic and Financial Affairs Council in Brussels that the growth rate announced earlier on Friday for last year was the highest in seven consecutive years.
Cyprus’s economy had actually been in a deep recession before it was bailed out in March 2013 under a 10-billion-euro(11.25 billion U.S. dollars) economic assistance program offered by the Eurogroup and the International Monetary Fund. The recession continued up to the end of 2014.
“The growth trajectory of the Cypriot economy is today reaffirmed. The annual growth rate announced for 2015 reads 1.6 percent, the highest in 7 consecutive years,” the Minister’s statement said.
The annual growth was given a boost by an acceleration of the economy by 2.7 percent in real terms during the fourth quarter of 2015, relative to the fourth quarter in 2014, according to flash estimates released by the Statistical Service on Friday.
It said that the growth was mainly attributed to the sectors of hotels and restaurants, professional, scientific and technical activities, retail and wholesale trade, manufacturing, construction, transport and financial service activities.
Georgiades said that now the preconditions for job creation and new opportunities in the economy are in place, but also vowed to continue abide by the rules of the adjustment program agreed with international lenders.
“Of course, sound public finances strategy and keeping up the reform momentum are essential preconditions for that. We need to steer away of those irresponsible tactics that brought our economy on the verge of collapse,” Georgiades said.
In a separate statement, Cypriot President Nicos Anastasiades said that “Cyprus has become a success story of economic reform” following the 2013 bailout.
“Almost three years ago, just after my election as President of Cyprus, the country was faced with nothing less than economic collapse. Today, I can proudly and confidently state that Cyprus has become a success story of economic reform,” Anastasiades said.
He added that he was confident that the economy will be on solid ground in the medium and long term.
He listed government key policy priorities for 2016, including macroeconomic and financial stability, structural reforms in the public service and the health system, as well as promotion of privatizations and of investments.
Recalling the chaotic conditions in 2013 and the harsh measures that went with the bailout, Anastasiades said the “shock therapy” imposed on Cyprus by its Eurogroup partners and the IMF were “both unprecedented and questionable”.
The measures dictated by international lenders included a radical downsizing of the overgrown banking system.
But Anastasiades said that “we have learned valuable lessons the hard way”.
He added that Cyprus is now in a position to look forward to the program’s successful completion in March.
Cyprus will be the fourth Eurogroup member to successfully complete a bailout program after Ireland, Portugal and Spain, leaving Greece to still struggle to stand on its feet after two programs.
