Cyprus considering early repayment of Russian loan

Finance Minister Harris Georgiades confirmed on Thursday the government is considering an early repayment of the €2.5 billion Russian loan the Cyprus obtained during the financial crisis.
 
“I can confirm that, in the context of public debt management, we are indeed considering the early repayment of the Russian loan obtained in 2012,” he said addressing the 9^th Nicosia Economic Congress, adding that the loan’s outstanding amount is €1.57 billion.
 
He expressed gratitude to the Russian Federation for responding to the then government, noting “since then, there has been significant progress and we believe that we can stand on our feet.”
 
Georgiades said the Cypriot economy is projected to expand by 3.5% this year from 3.9% in 2018, adding that the aim to create the conditions for zero unemployment by 2020 is achievable.
 
The only deterioration in 2018 was recorded on the level of public debt which rose to 102.5% of GDP due to the one-off increase stemming from the bond issue to facilitate the sale of the performing operations of the state-owned Cooperative Cyprus Bank to Hellenic Bank, noting however that following the transaction Cyprus rating has been upgraded by rating agencies to investment-grade status, while Cypriot bond yields declined sharply.
 
“Public debt is high but its serving cost is declining drastically, its maturity is extending and is on a downward trajectory,” he said, adding “our aim is to limit public debt to 96% by end-2019 and below 90% by the end of 2020.”
 
On the issue of non-performing loans, one of Cyprus’ main vulnerabilities, Georgiades said the auspicious target is to limit bad loans to single digits by the end of 2020.
 
Furthermore, referring to the decision by the administrative cost which said salary cuts during the financial crisis violated the Cyprus Constitution, Georgiades said the government has drafted its plans depending on the outcome of the appeal tabled by the government to the Supreme Court.
 
“I believe we will be ready for every scenario and we can collectively and responsibly manage this issue as well to avert any fiscal derailment,” he stated.
 
The Finance Minister said the public finances have been set on a course of sustainable management, noting that Cyprus expects possibly the highest budget surplus among the Euro area member states.
 
But he reiterated that we should not hesitate to take difficult but necessary decisions, often going against the tide, because that would help Cyprus to move forward.