Cyprus to get bailout from international creditors

The Mediterranean island has become the fifth member of the eurozone to agree a bailout with its creditors, with around £13bn worth of loans expected.

by Michael Northcott
Last Updated: 19 Aug 2013

The country requested the bailout from its European partners and the IMF in June this year, as part of a plea to help get its financial sector back on a stable footing.

Those who have lent to Cyprus have endured enormous losses because of the country’s intertwined relationship with the Greek economy and its financial system. Furthermore, lenders to private businesses in Cyprus have suffered heavy losses too, because Greece is Cyprus’s largest trading partner, so the rot of recession has spread to the island.

But this isn’t the start of the borrowing and bailouts for Cyprus. It has already borrowed 2.5bn euros from Russia, whose businessmen favour its sunny climate and flexible tax environment. We euphemise.

Anyway Whilst the figures is not as frightening as the larger sums needed by other claimants (Greece, Ireland, Portugal and Spain), it’s safe to say nobody is really rolling in it. And certainly not enough to comfortably fork out for yet another bailout. 

Not to mention that eurozone lenders are pretty peeved at president Christofias’ demands that Cypriot public sector workers get to keep their Christmas bonuses no matter what kind of bailout agreement is settled upon.

Are we being harsh if, on the evidence, we call Cyprus a banana republic?

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