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IMF Urges Action On Cyprus’s Non-Performing Loans

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.

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.

Egypt’s Suez Canal Economic Zone Draws $8.1B In Investments Through 255 Projects

Egypt’s Suez Canal Economic Zone (SCZone) has secured an impressive $8.1 billion in investments across 255 projects in the last 30 months, according to an official announcement on Monday.

Major Investment Boost For SCZone

The General Authority for the SCZone has successfully attracted 251 projects in its industrial zones and ports, accumulating $6.2 billion in capital investments, which has resulted in around 28,000 new jobs, as stated by SCZone Chairman Walid Gamal El-Din.

Additionally, four new projects have brought in $1.8 billion in investments, boosting the total capital inflows within the zone. These developments were discussed in a meeting with Mohamed Zaki El Sewedy, Chairman of the Federation of Egyptian Industries (FEI), and other officials from various chambers of commerce.

Strengthening Industrial Ties And Opportunities

The meeting focused on expanding investment prospects, fostering collaboration, and addressing challenges faced by industrial firms with strong export potential. A key objective was to encourage businesses to scale up their operations within the SCZone, leveraging its prime location, advanced infrastructure, and investor-friendly policies.

El-Din stressed the importance of the SCZone in driving Egypt’s economic growth and industrial transformation, citing the Ain Sokhna Integrated Industrial Zone as a flagship example of development. This zone is a testament to Egypt’s growing presence as a competitive global manufacturing hub.

The continued partnership between the SCZone and the private sector, El-Din noted, plays a pivotal role in building a strong ‘Made in Egypt’ brand, supporting local industrial development, and boosting innovation to improve Egypt’s position in global markets.

Acknowledging Achievements And Future Collaboration

El Sewedy praised the SCZone for its efforts in creating a robust investment climate, offering comprehensive services, incentives, and cutting-edge infrastructure. This meeting marked the beginning of a deeper collaboration between the SCZone and FEI, setting the stage for future joint initiatives.

Egypt’s Economic Outlook

Egypt’s economy is projected to grow by 4% in the year leading up to June, bolstered by supportive measures from the IMF, according to a Reuters poll conducted in January 2025. The poll also forecasts a GDP growth acceleration to 4.7% in 2025-26 and 5% in 2026-27.

However, the country’s GDP growth slowed to 2.4% in 2023-24, down from 3.8% in the previous year, primarily due to the ongoing currency crisis and the geopolitical impact of the war in neighboring Gaza, according to the Central Bank of Egypt.

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