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Georgiades: Cyprus is out of the danger zone

12/01/2015 10:50
Cyprus' banking system is on the mend after a very public collapse of its financial sector in 2013, the country's finance minister told CNBC today.

"We're in a much better situation," Minister of Finance Harris Georgiades told CNBC.

"We are definitely out of the danger zone now, and the recession seems to have run its course. We are very optimistic that the new year will see a return to positive growth rates" he said.

After four years of recession, the country's central bank governor, expects growth of 0.5 percent in 2015. It is also preparing two international debt issues this year, Georgiades told Reuters last week, although the details are yet to be confirmed.

Speaking to CNBC in Nicosia, Cyprus' capital, Georgiades said the economy had stabilized after its "severe crisis."

"Cyprus was led into an unprecedented crisis, the public finances and banking system were in a severe crisis and the real economy in a deep recession. But the last two years were years of correction, of reform, of consolidation and we already have very tangible and very positive results," he said.

Looking ahead, Georgiades insisted that the country was determined to reform its economy.

"We are not only interested in mitigating the crisis but in creating the foundations for a much more viable, long-running economic model," he added.

Georgiades also admitted that NPLs were a hangover from the country's "unsustainable credit expansion" in the past, but insisted the problem had "reached its peak" and that ongoing loan restructurings would see the number of NPLs decline.

Despite Georgiades' optimism, there are concerns about possible contagion from a key risk factor in the region: the upcoming general elections in Greece however the minister said that the upcoming elections in Greece would not affect its economic recovery.

"Despite our close links to Greece we have a separate economy. The links of the past are not there anymore," he said, adding that the elections were not a problem for Cyprus.

"We are implementing our own effort of reform and consolidation, we are seeing results, we have a stable economy nowadays and we are determined to grow. Even though, for the good of the Greek people, we hope that no problems will arise in Greece either."