While fiscal imbalances have “considerably” lessened, creating the preconditions for growth in the future, reflected in the recent sovereign ratings upgrades and the successful bond issues, “we still have way to go until the complete restoration of our country’s credibility and the upgrade to investment-grade,” the central bank said in its biannual economic bulletin.

“Therefore, the whole effort to consolidate the economy and strengthen economic growth should at no way relax, in particular by taking into account the uncertain global economic environment, but also the general geopolitical developments affecting us,” the central bank added.

The economy, which performed a turnaround after plunging into a prolonged recession in mid-2011, is still facing risks related to the high rates of unemployment and non-performing loans, the central bank said.

“The appropriate policy framework to deal with these two problems has already been shaped and put in place with positive results seen mainly in recent months” in the form of declining unemployment rate and an increase in loan restructurings, the central bank said. “Efforts to further strengthen economic growth, which will help reduce both unemployment and non-performing loans, have to further intensify”.

According to Eurostat, the European Union’s statistical office, Cyprus’s unemployment rate stood at 15.1% in October, which was the fourth highest in Europe, compared to 16.4% a year before. Delinquent loans accounted in September for 48% of the Cypriot banks’ overall portfolio, according to the Central Bank of Cyprus’ latest data.

Moody’s Investors Service and Fitch Ratings assigned Cyprus a B1 and B+ credit rating, which is four notches below investment grade. Cyprus’s rating from Standard & Poor’s is BB-, which is three grades in the non-investment area.

Source: Cyprus Mail