Entrepreneurs in Cyprus who borrowed at a low-interest rate about seven years ago when money was cheap, have been asked – since July 2022 – to pay increasingly higher installments.
But for how long they will be able to cope with this is something not even central bankers who make the decisions on behalf of the European Central Bank can answer.
Are there ways to make it easier for businesses and avoid freezing further investment?
Philenews reports that the reality now is that the time of cheap credit for businesses is now a thing of the past.
And that this inevitably makes it difficult or prevents a more dynamic credit expansion that would support the growth outlook.
A more serious and pressing problem is the financing of small businesses, which are the weakest links in the island’s economic activity.
In addition to high-interest rates, bank lending criteria for businesses have become more stringent because of the banks’ perception of increased credit risk.
This is linked with the state of uncertainty and the outlook for the wider economy, both inside and outside Cyprus. For specific sectors or companies, this has increased.