Brussels – The European Commission sees the public debt of Cyprus dropping below 100% of GDP in 2016, Commission Vice President Valdis Dombrovskis has told the Cyprus News Agency in an interview.
“Public debt will decline below 100% of GDP this year and that means if Cyprus maintains the current course there is no concern regarding market access,” he said.
The Public Debt Management Office has not yet published the debt/GDP ratio for 2015. However, based on a presentation it made in January it expects the debt/GDP ratio last year to be recorded at 109% of GDP.
Asked whether the fact that Cyprus is excluded from the extended asset purchasing programme (QE) is a source of concern, Dombrovskis said Cyprus has returned to the markets, it has tapped internal borrowing and its financing needs in the next years are small.
“In that sense we are sure that Cyprus can cover its financing needs on its own,” he said, pointing out that Cyprus has already tested the markets several times and has not only a sizeable primary surplus but also a small general budget surplus.
The Commission Vice President also commended Cyprus for concluding its economic adjustment programme.
“Cyprus has worked very hard to stabilise its economy, to return to sustainable growth and sustainable public finances and to implement an ambitious reform agenda,” he said.
Dombrovskis also pointed out that Cyprus will be subject to the regular surveillance mechanism such as the European semester and the macroeconomic imbalances procedure.
As Cyprus has exited from the programme, he added, the Commission is preparing country-specific report with a detailed analysis of the situation and recommendations for the future.
“It is important that Cyprus had impressive performance in the last years but there are significant persisting imbalances that need to be tackled,” Dombrovskis said.
On the privatisation of the dominant state-owned telecoms operator Cyta Dombrovskis noted that “parliamentary support was weak.”
Cyprus failed to meet one prior action of the last tranche as the Parliament did not approve a bill providing for the creation of a state owned private telecommunication company, which would absorb the public telecoms operation, as part of a privatisation scheme.
“The prior action had more to do with Cyta’s administrative structure and we believe that this would strengthen the competition of the Cyprus telecoms sector to the benefit of the consumers,” he said.
Cyprus received a total of €7.3 billion from the €10 billion earmarked in the financial envelop: €9 billion from the European Stability Mechanism (ESM) and €1 billion from the IMF.
