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IMF Urges Action On Cyprus’s Non-Performing Loans

by THEFUTURE.TEAM

June 10, 2024

The International Monetary Fund (IMF) has urged Cyprus to take decisive action to address the persistent issue of non-performing loans (NPLs), highlighting it as a critical factor for the island’s financial stability. While commending Cyprus for its economic recovery and fiscal discipline, the IMF emphasised the need for reducing public debt and maintaining primary surpluses until the debt-to-GDP ratio falls below 60%.

Persistent NPL Challenge

Despite significant progress in recent years, NPLs remain a substantial concern for Cyprus’s banking sector. The IMF advised Cypriot authorities to leverage the newly amended foreclosure framework and the “Rent-to-Own” scheme to accelerate the resolution of these problematic loans. This is especially pertinent in the current economic climate, influenced by the repercussions of the Ukraine conflict, sanctions, and rising interest rates.

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The high percentage of NPLs poses potential risks that could undermine the country’s financial stability. Effective management of these loans is crucial to prevent adverse impacts on the banking sector and the broader economy.

Banking Sector and Economic Implications

The Ministry of Finance has echoed these concerns, noting the risks posed by the banking sector’s developments in its strategic fiscal policy framework for 2025-2028. Although strong capital positions and excess liquidity support the banking system, the persistent issue of NPLs requires ongoing attention and comprehensive solutions.

Furthermore, the IMF underscored the importance of improving oversight of semi-governmental organisations and addressing deficits in the State Health Services Organisation (SHSO). The state’s financial support for SHSO, particularly strained by the pandemic, remains a critical fiscal issue.

Strategic Recommendations

For business professionals and investors, the IMF’s recommendations highlight key focus areas within the Cypriot economy. The call for robust action on NPLs suggests opportunities for investment in financial services aimed at loan recovery and restructuring. Additionally, reforms in the healthcare sector could present prospects for private sector involvement and investment in healthcare infrastructure and services.

The IMF’s emphasis on maintaining fiscal discipline and reducing public debt indicates a stable macroeconomic environment conducive to long-term investments. Entrepreneurs and business leaders should consider these dynamics when planning their strategies in Cyprus.

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Competition Authority Launches Comprehensive Review of ExxonMobil Cyprus Acquisition

by THEFUTURE.TEAM

September 16, 2025

Investigation Initiated Over Strategic Acquisition

The Competition Protection Authority has commenced a thorough investigation into the acquisition of ExxonMobil Cyprus Limited’s share capital by Petrolina Holdings Public Ltd through Med Energywise Ltd. This inquiry was formally initiated following a session held on 10 September 2025, after an in-depth review of the pertinent report by the Authority’s Service.

Concerns Over Market Compatibility

Authorities have expressed serious concerns regarding the compatibility of the transaction with established competitive practices. The review indicates that the acquisition may affect several critical petroleum markets, both horizontally and vertically, thereby raising the potential for adverse impacts on market dynamics.

Horizontal Market Dynamics

On the horizontal front, potential effects have been identified in the import market for petroleum products, as well as in both wholesale and retail distribution channels of these products. The consolidation is believed to increase the risk of price rises and coordinated actions, given the direct competitive proximity between Petrolina and ExxonMobil.

Vertical and Adjacent Market Implications

Vertical aspects of the merger are also under close scrutiny. The new entity could restrict competitors’ access to critical infrastructure such as storage facilities, supply channels, and customer bases. These restrictions could further affect the onshore distribution of fuels, the wholesale market for lubricants, and specialized technical services connected with fuel station operations.

Local Market Considerations

Particular attention is being paid to the potential concentration in the retail fuel market. The investigation suggests that a reduced competitive landscape within a four-kilometer radius of the companies’ fuel stations could lead to diminished local competition, adversely impacting consumer prices and options.

Next Steps and Industry Impact

The Competition Protection Authority, which reached a unanimous decision to pursue a full investigation, remains open to submissions from parties that might be affected by this transaction, as mandated by current legislation. A final decision is expected within four months upon receipt of all necessary evidence, potentially setting a significant precedent for future market consolidation cases in the energy sector.