No Magic Formula for Cyprus
World Economy

No Magic Formula for Cyprus

The year 2016 is set to be an important year for Cyprus and not just because everyone seems to be touting it as the year of settlement. In March, the country exits the assistance program after three years of hardship, instability, uncertainty and drastic change.
Ordinary people (not the fat cats employed in the public and semi-public sector) have suffered a great deal in these three years, many joining the ranks of the unemployed, others having their wages cut and a considerable number relying on handouts from state and charities to feed their families, NewsNow reported.
Unfortunately, nobody can forecast a great improvement for this year, as high unemployment is set to remain, many businesses will carry on struggling for survival and the banks will still be focusing their efforts on reducing the high number of delinquent loans on their books.
Bank of Cyprus CEO, John Hourican, in an article that appeared Thursday in Cyprus Mail, said “the coming year will not be an easy one, but with ambition, renewed energy and clarity of purpose and effort, I am certain that it will be better.”
The promise of a better year than 2015 is unlikely to fill people with optimism, but it is indicative of how slow the re-building of the economy will be, after the bursting of the bubble caused by easy bank credit and the subsequent collapse of 2013.
Although the government likes to talk about the recovery of the economy that has been evident, the slow rate at which it has been taking place is another matter. The reality is that there is no magic formula for speeding it up.
Hourican was correct in underlining the need for “clarity of purpose and effort.” We must not slip back into our old ways, which caused most of our problems, as soon as we exit the program. Keeping the economy on track, despite the unspectacular results for growth and job creation, must be the government’s main priority, even though it is certain to come under heavy pressure from the opposition parties and public sector unions to return to the reckless spending policies of the past.
Resisting such demands after March, when the troika will be out of the picture for good, will not be easy, as the government will no longer be able to blame adherence to prudent policies on the memorandum. It will have to show the resolve to stick to its policies, as it has commendably done in the case of Sunday shopping, refusing to bow to the pressure of the parties and unions, which specialize in populist irresponsibility.


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