It wasn’t long ago that Cyprus was doing pretty well for itself, its economy was a bright spot for the Eurozone and its financial sector was doing well. Then of course the Eurocrisis struck and along came the bailout. As with nearby Greece the Troika of international lenders the International Monetary Fund, the European Union and the European Central Bank offered a way out for the debt stricken country, but as with Greece the demands for austerity and budget cuts came with it.
Now, several months later the Cypriot economy has posted that it has recorded its worst annual economic contraction since the mid-1970s; according to official figures the country’s economy contracted by 5.9% in the second quarter of 2013 on a year-by-year basis, shrinking by 1.8% – the eighth consecutive quarterly contraction, which is worse than the 5.4% expected by economists.
The disappointing news came on the same day that Cypriot MPs adopted legislation demanded by international creditors in return for the second instalment of the bailout money. The first bailout tranche deal also involved the closure of the island’s second-largest bank Laiki and a large “haircut” on deposits above 100,000 Euros at the largest lender, the Bank of Cyprus.
Further austerity measures will now be imposed with many now concerned that the nation is likely to go the same way as Greece. Cyprus received the first tranche, worth 3 billion Euros, in May.
The economic news was overshadowed on Monday by reports that Syrian ground attack jets entered Cypriot airspace in what military observers dubbed a ‘goad-and-probe’ sortie. In response British RAF Typhoons were scrambled in response. Jet fighters were also scrambled in Turkey. Cypriot newspapers cited reports by local air traffic control sources that the Syrian air force jets had been observed flying over the city of Famagusta well within North Cypriot airspace.
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