IMF urges Cyprus to make 'tough decisions' to sustain economic growth

The economy of the Republic of Cyprus is showing steady growth; however, to maintain this positive momentum, the country needs to make a series of difficult political decisions. These are the conclusions reached by the International Monetary Fund mission following its visit to the island from April 22 to May 4, 2026.

Fund experts noted that current economic indicators remain strong, but further progress depends on reforms in key areas. Priorities include containing the growth of the public sector wage bill, reviewing tax incentives, and more targeted application of fiscal stimulus.

Special attention is given to the energy sector, where the IMF believes structural problems need to be addressed more quickly. The importance of maintaining effective mechanisms for managing non-performing loans (NPLs) to reduce risks to the financial system was also emphasized.

The Fund believes that the timely adoption of these measures will not only support current growth but also create a foundation for sustainable long-term development. At the same time, it was stressed that many of the proposed solutions may be politically sensitive and will require consensus.