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Cyprus, like most countries, was affected by the economic crisis which followed the collapse of the American financial institutions during 2008. Consequently, in June 2012, the Cypriot Government requested a loan from the European Financial Stability Facility, citing difficulty supporting its banking sector due to exposure from the Greek debt crisis. Since this time, the Cypriot Government and Troika have been negotiating the terms of a bailout deal. On 25th March 2013, the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) agreed a €10billion deal with Cyprus, making it the fifth country, after Greece, Ireland, Portugal and Spain, to receive money from the EU-IMF. This bailout will enable Cyprus to refinance its debts and provide as much liquidity to the banks as needed. Additionally, measures have been taken against the two banks most exposed by the Greek crisis, Laiki and Bank of Cyprus, which will be recapitalized using a percentage of money from deposits in exchange for shares in the bank. The 27 other banks and many Cooperative institutions in Cyprus, which weren’t exposed to Greece, continue business as usual.

Following the bailout Cyprus will now have a more secure and stable financial environment and will also enjoy lower interest rates. The experience will also ensure that a more conservative approach is taken by the Cyprus banks. A diversification of capital is expected to boost property sales, while the recent gas and oil discoveries are already generating substantial interest in the island, and sizeable oil revenues are expected to be generated in the next two to four years.


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