Cyprus Archives - Economy Watch

The Model Bailout

Cyprus will successfully exit its bailout programme this month after three years. The country has come a long way since 2013 when its banking sector was on the verge of collapse.

The Cypriot economy went through heavy reforms and recovered using just €7.25 billion of its €10 billion rescue package. The banking sector was stabilised, a budget surplus was achieved (down from a 5.5% deficit in 2013) and the current account nearly brought into balance. However, this is just the beginning.

IMF Praises Cyprus for Decision to Exit Bailout Program Early

The International Monetary Fund (IMF) praised Cyprus on Monday for its decision to end its participation in a bailout program two months early. The decision came after the Eurozone nation was able to recover its financial stability.

Cyprus had received the benefit of a rescue program given jointly by the IMF and the European Union. The program would have expired on May 14, with the loan portion from the EU institutions ending later this month.

After Rebound, Cyprus Gets ECB, IMF Scrutiny

Both the European Central Bank and the International Monetary Fund visited Cyprus to identify opportunities to stimulate growth in the once-depressed economy.

Analysts Expect Slight Improvement for Cyprus Economy in 2015

According to the International Monetary Fund, the Cyprus economy is expected to grow 0.2 percent for the year, which is a reversal from three years of economic contraction. Experts expect businesses from the European Union to play a role in the economic recovery. Cyprus is a nation located to the east of the Mediterranean Sea. Its inhabitants are mostly of Greek descent, but many are Turkish.

For Cypriots, a Glimmer of Hope?

The nightmare for Cyprus started in March 2013. The country’s banking sector faced a sudden squeeze. The two biggest players – Bank of Cyprus and Marfin Laiki Bank – were in danger of a collapse which would have sparked a huge negative shock for the island’s economy.

Could the Cyprus Economic Recession be Nearing its End?

During March of last year (2013), Cyprus agreed to an international bailout of approximately €17 billion from the European Central Bank, International Monetary Fund and European Commission. The size of this bailout was so significant that it actually amounted to 100% of GDP, and involved a bank bail in. A bank bail in is when the creditors of a borrower bear some of the burden by writing off some of their debt in order to make the level of debt more sustainable.

Cyprus Receives First EU-IMF Aid Tranche

Cyprus on Monday received its first tranche of a 10 billion euro bailout package from international creditors agreed earlier this year, after the near-collapse of the country’s banking sector.

Cyprus received 2 billion euros on Monday and will get as much as 1 billion euros more in June as the Mediterranean island’s aid package was activated, the European Stability Mechanism, the euro area’s permanent backstop fund, said in a statement.

The release came as finance ministers from the 17 euro countries also approved two fresh aid payments for Greece.

Cyprus Finance Minister Admits To Plans To Sell Gold Reserves

The Cypriot government may sell part of its gold reserves within the next few months, admitted Finance Minister Haris Georgiades on Wednesday, bringing truth to earlier speculation that Cyprus would be forced to sell its gold to meet its creditors’ demands.

Cost of Cyprus Bailout Swells to $30bn

A leaked draft report by Cyprus’ international creditors shows that the cost of bailing out the island state has swelled to 23 billion euros ($30 billion), larger than the entire year’s output from the country’s economy.

A leaked draft of the updated rescue plan, known as the Debt Sustainability Analysis, revealed that the total bill for the bailout has risen to 23 billion euros, from an original estimate of 17 billion euros, less than a month after the deal was agreed.

Cyprus Sells Gold Reserves to Raise €400m

Cyprus officials have agreed to sell around 400 million euros in excess gold reserves to help finance part of its bailout, according to various news reports which cited a draft report of the country’s financing needs.

The plan is contained in the official Debt Sustainability Assessment of the country’s financing needs, prepared by the European Commission, according to draft reports seen by Reuters and the Financial Times.