Cyprus won't need full EU bailout package: minister| MENAFN.COM

Tuesday, 16 August 2022 09:43 GMT

Cyprus won't need full EU bailout package: minister

(MENAFN- AFP) Cyprus will not need all of the 10-billion-euro bailout it received in 2013 as its economy recovers faster than expected, the country's finance minister told AFP.

"(The economy) is much better, but I'm not saying that it is good," Harris Georgiades said ahead of the second anniversary of the "unprecedented crisis" that shook the eurozone and left the Mediterranean island teetering on the brink of bankruptcy.

"The economy is recovering. We are still on a negative growth rate but each quarter is seeing an improvement," he told AFP.

Georgiades predicted a return to "very mild" growth this year.

In March 2013, Cyprus clinched a 10-billion-euro ($13 billion at the time) loan from the European Union and International Monetary Fund to bail out its troubled economy and oversized banking system.

Fearing a run, the government closed all the country's banks for nearly two weeks and imposed draconian capital controls when they reopened. Some restrictions remain.

Georgiades said Cyprus had made "significant progress" since the crisis.

"Unemployment is starting to come down, public finances are under control... and crucially our banking sector has been stabilised," he said.

"We do not have a deficit, which is an achievement as many other EU member states are still struggling to bring their deficit under control."

Due to the favourable economic climate, the minister said his country would not need the full bailout amount it was initially offered.

"We do not expect our banks for instance to need any new capital, through state money," Georgiades said. "Some of the 10 billion which was, let's say, reserved for this purpose -- buffered for this purpose -- will not be needed."

Cyprus has to date received "just over six billion" euros, he added.

Austerity measures since the crisis led to tax hikes, salary cuts and a slashing of social welfare benefits.

Georgiades said he hoped parliament would vote "over the next weeks" for a foreclosure bill to allow repayment of the latest tranche of bailout money.

He also promised Cyprus would "continue the same policy" towards long-term recovery by focusing on structural reform, including in areas such as privatisation and reducing bureaucracy.

"There is still work which needs to be done before we can safely say that we're back on viable and sustainable growth," the minister said.

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