Cyprus banks to suffer further losses in 2014
October 22, 2013 12:37 AM
People walk past a closed and empty branch of the Bank of Cyprus in Nicosia, Cyprus, Monday, Oct. 21, 2013. (AP Photo/Petros Karadjias)
NICOSIA: Debt-ridden Cyprus banks are in for a rough ride next year as a sharp recession stoked by international bailout terms hits consumers and businesses, the central bank governor said Monday.
“As for the prospects of the banking sector in 2014, the sector will suffer further losses due to expected further deterioration in the macroeconomic environment,” Panicos Demetriades told a parliament committee.
“This is down to higher provisions [for bad debt], increased non-performing loans, rising unemployment, falling household incomes, lower company sales and profits,” he said.
Demetriades said high unemployment and commercial bankruptcies will compound an already bad situation with people unable to service their mortgages and bank loans. But he added that bank restructuring and recapitalization would enable the banking sector to weather the crisis and recover.
He also predicted the recession-hit economy would contract by less in 2013 than the 8.7 percent forecast by the island’s international lenders.
The government is looking to shave 626 million euros off the budget compared to the one for 2013, but it needs to be approved by parliament before the end of the year.
Net expenditure, minus interest payments, is set at 5.59 billion euros compared to 6.22 billion provided for in the 2013 budget.
Finance Minister Haris Georgiades told the committee the budget deficit next year would be 7 percent of GDP – comfortably within the 8.2 percent limit set by the troika.
Although budget projections see GDP shrinking by 3.9 percent in 2014, a reduction on this year, Georgiades agreed with the central bank governor that it would be the “hardest year” for ordinary people as problems created by the crisis, such as youth unemployment, peak.
A version of this article appeared in the print edition of The Daily Star on October 22, 2013, on page 5.
Read more: http://www.dailystar.com.lb/Business/International/2013/Oct-22/235306-cyprus-banks-to-suffer-further-losses-in-2014.ashx#ixzz2iPbhRoM9
(The Daily Star :: Lebanon News :: http://www.dailystar.com.lb)