European Commission staff, in liaison with staff from the European Central Bank, visited Cyprus from 19 to 23 March to conduct the fourth post-programme surveillance mission. The mission found that the ongoing strong recovery and the renewed reform mandate following the presidential elections provide a window of opportunity to reduce the key vulnerabilities of the Cypriot economy. This should include addressing challenges in the banking sector given the still high level of non-performing loans and negative profitability. A renewed commitment to structural reform by all national stakeholders is also necessary to maintain growth over the medium term and safeguard fiscal sustainability. Despite these challenges, the positive macroeconomic environment combined with prudent fiscal policy has resulted in a remarkably strong fiscal position, even though a prudent fiscal stance remains warranted given the still-high level of public debt and risks to the fiscal outlook. In addition, the persisting current account deficit warrants close monitoring, given the high level of external debt and negative household savings.