The economy saw an “impressive turnaround” following the 2013 bailouts and financial crisis, but the government needs to wipe out “important legacies from its earlier boom-bust cycle”, the International Monetary Fund said following its Cypriot mission.

“The Cypriot economy has achieved an impressive turnaround since the 2012-13 banking crisis,” the IMF said.

However, its public sector debt remained high. This, along with the elevated debt of the private sector and banks’ non-performing loans, meant the economy was “vulnerable to adverse shocks, including a tightening of global financial conditions”, the IMF’s concluding statement said.

The IMF called on Cyprus to improve the investment climate in various sectors and strengthen governance and operational efficiency in the public and private spheres, including by adopting pending reforms to state-owned enterprises and restarting privatisation to “modernise the economy”.

The country’s GDP has grown by 3.6% year on year so far this year from 2.8% in 2016, and lifting the output to 5% below its pre-crisis peak.

This was a result of macroeconomic and financial policies by the authorities, as well as its progress on structural reforms that enabled access to capital markets and upgrades to credit rating.