IMF completes mission to Cyprus and issues policy recommendations

An IMF mission led by Alex Pienkowski visited Cyprus from April 22 to May 4 to assess the country's economic landscape. The IMF commended Cyprus for its economic resilience, noting that public debt has fallen below 60% of GDP and growth remains among the highest in the EU. Key recommendations include maintaining fiscal discipline, avoiding distortive tax cuts to address inflation, and continuing structural reforms in human capital and the judicial sector. A primary point of concern for the IMF is the potential legislative revision of the foreclosure framework. The IMF warned that any relaxation of these rules could discourage debtor discipline and limit access to financing for households and small businesses. In response, the Ministry of Finance welcomed the recommendations, agreeing on the need for efficient public spending while emphasizing that any changes to the foreclosure framework must protect vulnerable borrowers without creating loopholes for strategic defaults. The government confirmed it is implementing an energy strategy to tackle external challenges and associated costs.