By Savvakis C. Savvides

A business today is like an orange that is forcibly squeezed from both sides under conditions of extreme debt and being forced to operate in sub-optimal conditions during the pandemic.

This leads to the depletion of equity and makes the ability to undertake new capital investments when the epidemic is over highly unlikely. This is the situation the world finds itself in. A situation which can also lead to a deep and long depression as domestic demand is also suffering.

This is particularly relevant in Cyprus, where extreme and widespread private debt conditions existed even before the outbreak of the pandemic. The failure of the current administration to even appreciate what we are up against leads them to implement half measures and even make matters worse, their myopic policies revolving around the extension of the debt of our failing banks. .

This is a banking system which, eight years after the bail-in, still fails to differentiate between a collateral loan and a loan granted primarily on the basis of a sound and appropriate assessment of repayment capacity. . How do we get over where we seem to be heading slowly but surely? Indeed, do we ever learn from our mistakes?

In the final analysis, I wonder if anyone in government, or its advisers, even cares to face reality and face the challenges posed by these extraordinary events head-on in order to deal with them rather than just dress the window!

Savvakis C. Savvides is an economist, specializing in economic development and project financing. He is a former senior executive of the Development Bank of Cyprus and has been a regular guest lecturer at Harvard University and more recently at Queen’s University, Canada. Author’s page: https://ssrn.com/author=262460.