CBC Governor: Cyprus Banking System On Positive Course But Vigilance Required

by THEFUTURE.TEAM

August 6, 2024

In a recent address, the Governor of the Central Bank of Cyprus (CBC) emphasised that the country’s banking system is on a positive trajectory, showcasing resilience and recovery. However, he cautioned against complacency, underscoring the need for ongoing vigilance and prudent management to sustain this progress. This balanced perspective reflects the complexities of navigating the post-crisis economic landscape and highlights the critical factors influencing Cyprus’ financial sector’s future stability and growth.

The CBC Governor’s optimistic outlook is grounded in several key indicators of banking sector health. Notably, there has been a marked improvement in the quality of assets held by banks, a decline in non-performing loans (NPLs), and an increase in capital buffers. These developments result from rigorous regulatory measures and strategic reforms implemented over the past decade, aimed at fortifying the financial system against future shocks.

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A significant factor contributing to this positive course is the reduction in NPLs, which posed a substantial challenge for Cypriot banks in the aftermath of the financial crisis. The concerted efforts to resolve and manage bad debts have borne fruit, significantly lowering the NPL ratio and restoring confidence in the banking sector. This progress is crucial, as high levels of NPLs can severely constrain a bank’s ability to lend, thereby stifacing economic growth.

Moreover, the increase in capital buffers has fortified the banks’ capacity to absorb potential losses, ensuring greater stability and resilience. Enhanced regulatory frameworks have mandated higher capital requirements, promoting a culture of cautious risk management and financial prudence. This shift not only safeguards the banking sector but also builds trust among depositors and investors, fostering a more robust economic environment.

Despite these positive developments, the CBC Governor’s warning against complacency is well-founded. The global economic environment remains uncertain, with potential risks such as geopolitical tensions, inflationary pressures, and the ongoing impacts of the COVID-19 pandemic. These factors could pose significant challenges to the stability of the banking system if not carefully monitored and managed.

For Cyprus, maintaining the momentum of banking sector recovery requires a continued focus on several strategic areas. Firstly, there is a need for sustained efforts in digital transformation. Embracing advanced technologies can enhance operational efficiency, improve customer service, and mitigate risks associated with cyber threats. Cyprus’ banking sector must continue to innovate and adapt to the rapidly evolving digital landscape to remain competitive and resilient.

Secondly, enhancing the regulatory framework remains imperative. Ongoing adjustments to regulatory policies should aim to address emerging risks and ensure alignment with international standards. This proactive approach will help preempt potential vulnerabilities and reinforce the sector’s overall health.

Lastly, fostering a culture of prudent lending and robust risk management is essential. Banks must prioritise sound lending practices and maintain stringent credit assessment processes to prevent the accumulation of bad debts. This approach will ensure that the banking sector remains a pillar of stability and a catalyst for sustainable economic growth.

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Navigating Persistent Pressures: Labour Shortages, Bureaucracy, And Payment Delays In Limassol

by THEFUTURE.TEAM

December 19, 2025

Labour Shortages Challenge Expansion

Recent data from the Limassol Chamber Of Commerce And Industry underscores the enduring pressure within Limassol’s business community. Rather than indicating a sudden economic downturn, the survey reveals a gradual intensification of challenges that have long been a concern for local enterprises.

Skilled Labour In Short Supply

At the forefront is a chronic shortage of skilled labour, which accounts for 22.5% of the responses. Companies across a diverse range of sectors—from engineering and technical services to professional driving and specialized sales—are grappling with vacancies that remain open for extended periods. The persistent demand for critical skills forces many firms to overextend their existing workforce or postpone strategic projects. While recruiting talent from abroad is increasingly seen as a necessity, the process is often hampered by procedural delays, strict regulatory constraints, and rising employment costs.

Administrative Complexities And Public Sector Frustration

In addition to labour challenges, businesses express deep frustration with public-sector inefficiencies. Slow administrative procedures, fragmented communication, and a lack of clear guidance have rendered government support only marginally effective. With more than half of respondents regarding public services as minimally helpful, the inefficiencies highlight a system that frequently delays critical decisions and complicates routine business processes.

Deteriorating Payment Discipline

The survey also highlights a significant decline in payment discipline, with difficulties in collecting debts now ranking third among business concerns at 11.8%. Late payments are intensifying cash-flow pressures, extending through supply chains and further straining liquidity. Added to this is a sluggish justice system, where prolonged court delays have left companies financially exposed, often shouldering the burden of non-compliant customers while legal remedies lag behind.

Cost Pressures And Cautious Investment

Rising labour costs, intense domestic competition, and the pressure of lower-cost international markets — particularly in Asia — are driving firms to reconsider their investment priorities. Although nearly 60% of businesses intend to hire in the near term, investment plans in infrastructure, technology, and renewable energy are markedly selective. Overall sentiment remains cautious, with two-thirds of respondents expecting sales to stay level, both domestically and in overseas markets.

Calls For Policy Reforms And Digital Transformation

In an environment strained by excessive bureaucracy and inconsistent policy, businesses advocate for decisive governmental action. Respondents have pointed to the need for reduced business taxation, streamlined administrative processes, and more responsive public services. Furthermore, investment in digital transformation, artificial intelligence tools, and enhanced collaboration with academic and research institutions are seen as critical to boosting competitiveness and fostering innovation.

Conclusion: A Need For Strategic Reforms

The autumn 2025 barometer paints a picture of a resilient business community operating under increasing strain. With entrenched labour shortages, administrative inefficiencies, and deteriorating payment discipline, there is a clear call for targeted reforms. Addressing these structural challenges will be essential for ensuring that Limassol’s businesses not only sustain their current operations but also position themselves for future growth in an increasingly competitive global landscape.

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