GO
Loading...

Economy more resilient than expected: Cyprus Minister

The Cypriot finance minister told CNBC that Cyprus' economy had proved more resilient than many had expected, and that the government had worked well with the country's central bank governor, who has just resigned.

Finance Minister Harris Georgiades was speaking one day after Central Bank Governor Panicos Demetriades submitted his resignation. His replacement, Chrystalla Georgadgi, was announced on Tuesday and will take over on April 11.

(Read more: Cyprus central bank governor resigns)

While the reason for Demetriades' resignation was unclear, it was apparent he had difficult relations with the center-right government -- President Nicos Anastasiades said last September that he was seeking Demetriades' removal.

However, Georgiades denied he was relieved Demetriades had resigned. "No, it would be unfair to say that," he told CNBC.

"There were problems in the past, but we have tried and we have managed to cooperate quite well over the last year. But it happens and he has decided to step down, and life goes on."

(Read more: Cyprus sees more stability)

Cyprus Finance Minister Harris Georgiades (L) speaks with the European Central Bank President Mario Draghi (R)
PETER MUHLY | AFP | Getty Images
Cyprus Finance Minister Harris Georgiades (L) speaks with the European Central Bank President Mario Draghi (R)

Demetriades had criticized the Cypriot president's handling of the country's financial crisis, which saw international lenders bail-out the country's banking sector, offering 10 billion euros ($13.8 billion) in aid last March.

"It was a difficult year," Georgiades told CNBC. "We had to cooperate and the best was done under the circumstances, and the fortunate thing is that we have come a long way since the dramatic climaxing of the problems last year, in the economy as a whole, but also in the banking system."

Preliminary data out on Tuesday showed Cyprus remained in recession in the fourth quarter of 2013, but the depth of decline slowed. Cyprus' economy contracted by 0.8 percent in the fourth quarter of 2013, slightly up from the 0.9 percent drop in the third quarter, according to the latest statistics from the finance ministry.

On a year-on-year basis, the economy contracted 5.0 percent in the fourth quarter, down from a 5.7 percent drop in the third quarter.

Georgiades admitted that economic challenges remained in Cyprus, with unemployment still high. However, he argued that "key sectors of the economy have proved much more resilient than many thought."

"A year on from the climaxing of the problems, I think we have already come a long way...There were problems; there were imbalances; we are very actively dealing with them, so the combination of the resilience and the prospects of key sectors of the economy, together with our efforts in correcting everything that was wrong, is creating the foundations for a much more viable economic model."

He highlighted that the tourism sector had remained particularly resilient and that it was the "powerhouse" of the Cypriot economy.

—By CNBC's Kiran Moodley. Follow him on Twitter @kirancmoodley

Contact Europe News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Europe Video

  • A yes vote in the upcoming Scottish independence referendum could lead some insurers to move their headquarters to London, says Mark Nicholson, associate director at Standard & Poor's Rating Services.

  • The U.S. Federal Reserve remains data dependent and will not bow to hawks, says Mark Haefele, global chief investment officer at UBS, as Janet Yellen continues to make the argument that there is slack in the labor market.

  • European shares closed lower on Friday as tensions in Ukraine flared up once again. It comes after stocks fluctuated as U.S. Federal Reserve Chair Janet Yellen spoke about the labor market in Jackson Hole, Wyoming.