31 July 2018 Executive Summary Sapienta Country Analysis Cyprus

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POLITICAL ANALYSIS AND OUTLOOK: Exploratory talks have started for a resumption of negotiations to solve the Cyprus problem. It is not certain that talks will resume, although a threat by the US to veto the renewal of peacekeeping forces may concentrate minds.

STRUCTURAL REFORMS AND NATURAL GAS: New laws will bolster the investment fund sector. Electricity liberalization is likely to miss its deadline. ExxonMobil is due to drill in November, while Turkey’s drillship is also ready to drill in Cypriot waters .

FISCAL PERFORMANCE AND FORECAST: Fiscal policy remains very cautious and the new public debt issuance related to the liquidation of the Cyprus Cooperative Bank has not yet pushed debt to unsustainable levels.

BANKING SECTOR: As part of the liquidation of the co-op, parliament has passed a package of laws that should significantly reduce the room for manoeuvre by strategic defaulters. The package included a loan securitization law.

MACROECONOMIC TRENDS AND FORECAST: We have made an estimate for the very significant impact of a no-deal Brexit on the Cyprus economy. Growth in tourism, real estate and car registrations appears to have peaked.

For more information about Sapienta Country Analysis Cyprus and a sample visit https://sapientaeconomics.com/country-analysis-cyprus/

 

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