Cyprus Has 'Very Serious Imbalances' in Economy - EU
Cyprus is experiencing very serious economic imbalances, said the EU Commission following its in-depth review. The imbalances are not excessive but need to be urgently addressed, according to the review.
In particular, the island's current account, public finances and the financial sector need close monitoring and urgent economic policy attention to avoid negative effects on the economy and on the wider EU union, says the review.
A total of 12 member states were reviewed for risks to the overall economic balance in the EU, including Belgium, Bulgaria, Denmark, Finland, France, Italy, Hungary, Slovenia, Spain, Sweden and the United Kingdom.
Unless the member states take action to address the imbalances they could be placed under an 'Excessive Imbalance Procedure' in which up to 0.1% of the country's GDP could be sanctioned.
It is the failure to take action that will be sanctioned, not the failure to reverse the imbalance, said the Commission.
The reviews are part of the Alert Mechanism Report launched in February 2012 and part of the new fiscal treaty to monitor and control EU member states' government budgets.
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