An excessive level of fiscal imbalances puts countries in a situation of vulnerability, where they can be hit by a sharp decline of confidence among firms, households and investors. Politis: Cyprus prior to the crisis had had a double digit current account deficit (almost reached 18% in 2008). Even during the recession it records a current account deficit of 7–8%.
Should this be a major source of concern for Cyprus? Do you think that this might be one of the amendments required to be made in the Stability and Growth Pact – the Maastricht Treaty, adding into the criteria one for the current account deficits?