Cyprus is set return to the financial markets before the end of its bailout programme in 2016 and should require no more funds from international lenders, President Nicos Anastasiades told a German newspaper Handelsblatt today. “I hope we will see first signs of a turnaround in the second half of 2014,” he added.
Cyprus became the fifth eurozonecountry requiring international rescue earlier this year. Its banks exposed to Greece, it was teetering on the brink of a financial meltdown, hammering large depositors at the island’s two largest banks with losses and prompting a €10 billion bailout package in March.
Lenders from the European Union, the European Central Bank (ECB) and International Monetary Fund (IMF), known as the troika, expect Cyprus’ 17-billion-euro economy to contract by 8.7% this year and 3.9% in 2014. “If we stick to budget discipline and use our possibilities, we won’t need further loans,” Anastasiades said, adding that the danger of sovereign bankruptcy was now finally averted.
Cyprus enforced capital controls on March 29 to prevent a flight of cash from its banks. Although restrictions have been eased, there are still limits on cash withdrawals, cheque transactions and on large cash movements. Under the bailout terms, Cyprus shut down one insolvent bank, Laiki, and forced big depositors to contribute towards recapitalising a second, Bank of Cyprus.