Georgiades told state television that loans in arrears officially stood at 47% of the total, representing €28 billion.

"This is only in terms of statistical purposes,as there has been a considerable restructuring of red loans that are not reflected in official statistics," Georgiades said.

He added that non-performing loans actually made up 38% of the total, representing €22 billion - a reduction of 21.4%.

The restructuring of non-performing loans was not reflected in the statistics of the central bank, as the restructured loans, though being serviced, must be kept in the red list for 90 days under agreements with international lenders.

But Georgiades cautioned that the problem of non-performing loans was still a serious one and must be handled in earnest by the banks.

Cyprus was pulled back from bankruptcy with a €10-billion economic assistance program agreed on with the Eurogroup and the International Monetary Fund in 2013.

Under the terms of the agreement, Cypriot lenders, which lost about €4.5 billion because of their exposure to the write-down of the Greek debt in 2012, had to be restructured and recapitalized, driving the eastern Mediterranean island into an even deeper recession.

Georgiades said that as Cyprus' economy had returned to a growth in 2015 after a four year contraction, the rate of restructuring of non-performing loans would accelerate.

"What will help the process more is the recovery of the economy. As recession is left behind, the ability of borrowers to service loans will be strengthened," he said.

He added that the recent raising of €1 billion from international markets would help the government fulfil its adjustment program which started in 2013.

"The government is already preparing a second phase in economic policy to promote such changes, having already faced the most acute consequences of the crisis," Georgiades said.

Source: Famagusta Gazette