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Cyprus

Yearbook 2013

Cyprus. The year was marked by a fight between the government and international lenders about how the country's economy would get on its feet. The crisis was dealt with from March by President and also Prime Minister Nicos Anastasiades from the right-wing party DISY (Democratic Assembly), who resigned from the presidential elections held in two rounds on 17 and 24 February.

2013 Cyprus

In March, the so-called troika - the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) - offered Cyprus € 10 billion in emergency loans on condition that the country's government privatized government property worth € 1.4 billion and forced it another EUR 5.8 billion from the country's banks. The banks had ended up insolvent after lending money, among other things. deposits from Russian oligarchs, to Greek banks where they had largely been lost. Russian citizens were estimated to have approximately EUR 20 billion invested in Cypriot banks, almost one third of the banks' total assets. Germany believed that Cyprus, with low taxes and high savings rates, was a center for Russian money laundering.

A tax on deposited funds was proposed, but the criticism was sharp as the tax would violate the EU deposit guarantee. After hard negotiations, Cyprus and the troika agreed that a one-time tax of up to 40% would be levied on assets over EUR 100,000. The agreement also meant that the country's second largest bank, Cyprus Popular Bank, also called Laiki, was wound up. Deposits of less than EUR 100,000 were transferred to the country's largest bank, Bank of Cyprus, which was restructured. The agreement, which also included pay cuts for civil servants and a new property tax, was voted on in Parliament on April 30.

According to Countryaah, many Cypriots feared their money would disappear. The queues rang long at the ATMs when people took out their savings. A strict capital control was introduced which allowed withdrawals of a maximum of EUR 300 per day, that foreign travelers were allowed to carry a maximum of EUR 1,000 and that international transactions should not exceed EUR 5,000 per day. These restrictions were later relieved gradually.

The protracted negotiations led to the total cost of saving the economy in April estimated to have risen to EUR 23 billion. Anastasiades announced new budget-strengthening measures, and the first part of the emergency loan, EUR 3 billion, was paid out in May.

Former Defense Minister Costas Papacostas was sentenced in July to guilty of manslaughter in connection with the explosion on a military base that claimed the lives of 13 people in 2011. The sentence was five years in prison. Former Foreign Minister Markos Kyprianou, who was also charged in the case, was acquitted.

A 25-year-old Swedish man with Lebanese background was sentenced on March 21 to four years in prison for commissioning an attack on the Israeli Hizbullah guerrilla on an attack on Israeli interests in Cyprus. The man had admitted that he had spied on Israeli tourists on the island.

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