The 10-member Council, composed of academics and economists, met with the President of the Republic Nicos Anastasiades and Finance Minister Haris Georgiades and agreed to undertake technocratic research on various sectors of the Cypriot economy.

In statements following the meeting, head of the economic policy council Christopher Pissarides said the sectors for which the Council will carry out studies include the banking system, energy, the public finances, and development. "Our aim is to carry out in depth studies on a technocratic level to assist the political leadership to take decisions on the economy," he said.

Asked on the priorities on the Cypriot economy, Pissarides said an environment that would attract foreign investment and development projects should be considered as a priority. "Only economic growth could contain unemployment and reduce it to the pre-crisis levels, therefore, growth, competiveness and job creation are urgent," he said, noting however that he does not believe that unemployment in Cyprus will reach the levels of Spain and Greece, which in March 2013 exceeded 26% and 27% respectively. According to Eurostat, figures, Cyprus’ unemployment in March 2013 reached a record 14.2%.

Asked what should be considered as top priority for the Cypriot economy, Passarides noted that Cyprus should regain the confidence of the international economy system. "The foreign investor confidence in the Cypriot economy should be restored," he said, adding that so far this was not possible due to capital restrictions and the uncertainty surrounding the island`s banking system.

Under the €10 billion financial assistance agreement, Cyprus Popular Bank, the island’s second largest lender will be wound down, with its uninsured deposits (over €100,000) estimated to take losses up to 80%. The bank’s good part (assets and insured deposits below €100,000) will be absorbed by Bank of Cyprus, the island’s biggest lender, which is under consolidation process. Furthermore, the operations of the Cypriot banks in Greece were carved out and sold to Greek Piraeus Bank. Following the Eurogroup decision on March 25, Cyprus imposed restrictions on the movement of capital in a bid toavert a run on the banks.

According to a European Commission document on debt sustainability, the real Cypriot GDP will shrink by 8.7% in 2013 and 3.9% in 2014, followed by a modest growth in 2015.

Source: Financial Mirror