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31 Mar 2017 Exec summary Sapienta Country Analysis Cyprus

The following is a shortened version of executive summary in the monthly, in-depth Sapienta Country Analysis Cyprus. For more about Country Analysis Cyprus visit here. For subscription options, visit the subscription page  Political analysis and outlook: We are holding the prospects of a settlement of the Cyprus problem at 30%. Poor EU-Turkey relations, combined with the weak outlook for progress in the talks, imply growing risks for political and economic stability. Structural reforms and natural gas: Contracts for the third gas licensing round are due to be signed in early April amid plans by Turkey for exploration in the Mediterranean. Discussions continue on the new healthcare system and appropriate contribution rates. Fiscal performance and forecast: Fiscal performance remained strong in the early part of 2017  and the government has revised up its primary surplus in 2016 to 3% of GDP. Future performance will be influence by who wins the February 2018 presidential election. Banking sector: We believe it could be 2020 before the NPL ratio at BOCH falls below 10%. For the banking system as a whole, NPLs are declining but bad loans among small and medium-sized enterprises (SMEs) have been rising. Macroeconomic trends and forecast: The recovery continues to be largely broadbased apart from financial services, which are still in decline. With signs of another strong tourism season coming, we forecast real GDP growth of 2.7% in...

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31 Mar 2017 Turkey’s next moves over Cyprus and gas

Last week, Turkey’s Ministry of Foreign Affairs issued another statement about offshore hydrocarbons exploration in the Cyprus Exclusive Economic Zone (EEZ). Turkey has been issuing statements since 2004, when the Republic of Cyprus (ROC) first delineated the EEZ. For reasons I shall explain below, the latest statement has been keeping me awake at night. Read full article here

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26 Mar 2017 What’s behind the EU-Cyprus budget spat?

On Tuesday, Finance Minister, Harris Georgiades told state radio that the Eurogroup meeting for eurozone finance ministers had accepted his position on the government’s budgetary policy. While there was no specific reference to Cyprus in the official Eurogroup statement by the president, Jeroen Dijsselbloem, he did say that during the meeting they had “followed up on the implementation of the budgetary plans” (of all member states). Dijsselbloem added they would “take stock again on the implementation of the budgetary plans” in May, on the basis of the European Commission’s Spring forecast. Read full article...

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12 Mar 2017 No solution – no UN and no gas?

Efforts to solve the Cyprus problem are dying fast. In an interview with Kibris on Monday, the UN Special Advisor, Espen Barth Eide said something that should wake everyone up on this island. Translated back from the Turkish, he said: “If the process fails, I have the feeling that it will not be possible to expect the UN to come again after a couple of years when things improve and give it another try. I don’t know. This is why I am worried. I would be more worried if I were living here. I hope I am wrong but I have to say that I am worried it will not be a smooth exit.” This is diplo-speak for: “If you don’t come back to the table, don’t expect the UN to try again”. Read full article...

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04 Mar 2017 Updating Cyprus’money-laundering record

Just over two weeks ago, Transparency International published a report called “Top Secret Countries Keep Financial Crime Fighting Data to Themselves”. Transparency and good preventive practices are important because money-laundering cases are difficult to prove. The Magnitksy case, for example, has been open in several jurisdictions for years (although the UK never opened a case on the matter) and despite Cyprus and other jurisdictions co-operating together on it through Europol, to date no one has even been charged, let alone convicted. Read full article...

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05 Feb 2017 Will Cypriots spend or save their extra income?

If you earn a gross salary of more than €1,500 per month, you will have noticed an increase in your net income at the end of January. This is because the ‘special contribution’, introduced as part of the bailout programme, expired at the end of 2016. How big that increase was depends on how much you earned in the first place. Read full article here

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