Key developments and challenges

The largely foreign-owned banking sector has weathered the financial crisis well, although credit to the private sector shows little growth and lending standards remain tight. The economic recovery needs to become better established to improve lending conditions, and cooperation with home country supervisors may need to be strengthened, including through the new European framework.

The development of alternative energy sources, including renewable energy, and the promotion of greater energy efficiency continues to lag behind regional standards, highlighting the need for greater emphasis in this critical area.

The economic crisis has led to a sharp rise in the public deficit due to a significant drop in revenues. It is therefore essential that the new government puts in place a credible fiscal consolidation strategy, especially in the areas of health, social security and pensions.