Eurozone finance ministers celebrated in Brussels as Cyprus exited its bailout programme – the fourth EU country to do so, while Greece’s creditors continued to stall over its latest rescue package. Cyprus signed up to a rescue package of as much as €10 billion ($11 billion) in March 2013, when its banks collapsed and the country had to impose capital controls to prevent financial meltdown.
The bailout was launched in March 2013, when Cypriot banks collapsed and the country imposed capital controls to prevent complete financial meltdown. While the economy slumped by 5.9 per cent in 2013 and shrank by another 2.5 per cent in 2014, provisional figures show that it rose by 1.4 per cent in 2015, and it is forecast to grow by 1.5 per cent this year.
Eurozone finance ministers, who met in Brussels for their monthly gathering, praised the island for its efforts to bring its economy back on track and confirmed that Cyprus would exit its three-year, €10bn (£7.7bn) programme on 23 March. The IMF’s president, Christine Lagarde, congratulated Cyprus on its “accomplishments under the economic adjustment programme, which has delivered an impressive turnaround”.
They said they “welcomed the fact that economic activity has continued on a positive trend, and the banking system has further healed.”
“We can all rejoice at the success of this program and we can say that the Cypriot economy is reinforced by this program” said Pierre Moscovici, the EU’s economic affairs chief.
Indeed, Cyprus has outperformed on almost every major economic indicator, as it has refocused its economy on tourism, shipping, construction and business services. Its debt is lower than forecast (106 per cent in 2015 rather than 126 per cent), it has a budget surplus (down from a 5.5 per cent deficit in 2013), and the current account is almost in balance.
“There is still one prior action outstanding, but overall the Cypriot authorities have delivered a very, very good job,” said Jeroen Dijsselbloem, the Dutch finance minister who presides over the discussions with his counterparts in the eurozone.