piraeus bank group

Cyprus, Three Years in Retrospective: A Journey in Now-Charted Waters

When the global economic turmoil begun, the Cypriot economic activity was hit just as any other country-member of the Euroarea.

Just after, the country began its recovery the explosion of the Vassilikos power plant in the summer of 2011 put rather abruptly a halt to growth prospects

The cherry on the cake? The immediate need of financing a “bleeding” domestic financial institution, while at the same time the country was shut from international markets due to a downgrade of its sovereign rating.

What happened after that is history.

Following a week of negotiations, on March 25th, 2013 the Eurogroup, along with the Cypriot government reached a final decision regarding the amount of financial assistance that Cyprus will receive from the troika and the necessary actions to be taken concerning the local banking sector, leading to the imposition of capital controls for the next two years and the one-off haircut of deposits.

Three years after that, the country is back on the growth track.

Cyprus has gone through a heavy restructuring program of its economy as a whole. But managed to recover swiftly. However, two main issues must be addressed and prioritised as of now. The proceedings of the Planned Privatisations as seen in the table below. While, the tackling of the high Non-Performing Loans is a key issue not only for the Cypriot financial sector but for the economy as well, Cyprus has the highest ratio in the EU.

Ilias Lekkos
Group Chief Economist
Dimitria Rotsika