Cypriot economy still has "significant risks"

Photo: Sergey Yeliseev

The Cypriot economy still carries "significant risks", according to the IMF.

The International Monetary Fund says that the island is on track to achieve its financial adjustment program, but its second review of the country's economy cautions that "reform fatigue" and "prolonged internal tensions" could hinder reforms and hold back confidence, reports Cyprus Property News.

Tha banking system also needs time to recover from its crisis in 2013, the long-term effects of which are still unclear.

Internal tensions within the banks and authorities could delay any major policy reforms in the financial sector, but rising unemployment also remains a concern, with worsening social conditions potentially sparking doubt in the financial adjustment program and, as a result, slowing down the ongoing process.

The financial adjustment program was introduced by internatinoal lenders following an unprecedented bailout of the Cypriot economy last year. The island agreed on a €10 billion bailout from the ECB, IMF and European Commission, which prompted a controversial raiding of uninsured deposits in bank accounts, affecting both locals and expats with large savings.