Insider Economy Coronavirus crisis reminds of 2013 financial shock in Cyprus

Coronavirus crisis reminds of 2013 financial shock in Cyprus

Uncertainty and fear sparked from the coronavirus outbreak brings back memories of 2013 when Cyprus suffered the shock of haircut on deposits and a collapsed economy and banking system.

Since 2013, Cyprus made major efforts to achieve a positive fiscal balance, stabilise its banking system and pave the way for a large number of the population to get jobs and sufficient income again.

But a big shock has made its way back, not from poor financial management or even a bubble but from a global pandemic which started in China, Phileleftheros reports.

Seven years have passed since March 21, 2013, when the Central Bank of Cyprus decided to put the Popular Bank under liquidation.

The play of state is different now since the victims of the crisis are coronavirus-hit. The overall situation is unprecedented for Cyprus, especially for the tourism and hotel industry which has been extremely helpful to the economy at difficult times.

At the same time, the coronavirus epidemic has had a direct impact on the real economy and consumption, which – although it cannot be measured at this stage –uncertainty for a number of industries and businesses is on the rise.

As for banks, they do have enough capital and excess liquidity to lend to businesses but they need to proceed carefully so as to avoid the rise of non-performing loans. Economists already warn over the country’s growth rate, and its impact on tourism and trade.

GDP before the coronavirus epidemic was estimated at €22.39 billion in 2020, much higher than the €19.3 billion of ten years ago. However, data will now change, GDP will fall and state funds won’t come in to back spending.

The Treasury had estimated that 2020 would bring in €1.06 billion from companies from due taxes. The target is expected not to be achieved, since hotel units are uncertain over their months of operation and the whole year is set to be rounded up with losses.

Read more:

Top Stories

Alcohol consumption among Cypriot students high

Alcohol consumption among students has been reduced, the Cyprus National Addictions Authority ascertained on the basis of a European research, conducted every four years....

Earthquake measuring 5.4 felt all over Cyprus

According to first information from EMSC an earthquake measuring 5.4 on the Richter scale occurred around 16:30 and was felt all over Cyprus. Due to...

UK hits 5m vaccine doses as health minister defends scheduling change

British health minister Matt Hancock on Thursday (January 21) lamented another record daily number of COVID-19 deaths, but hailed the achievements of the UK's...

Increase of rapid tests to general population, workers

The number of antigen rapid tests conducted all over Cyprus will increase with tests taking place among the staff of private companies, industries, banks,...

Moody’s: Bank of Cyprus in better position to deal with COVID downturn due to new bad loan portfolio sale

Moody’s rating agency says that the new sale of a bad loan portfolio by the Bank of Cyprus, puts the bank in a better...


Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...


No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...