While President Nicos Anastasiades was in Qatar wooing investors in a bid to help his country recover from a still-growing economic crisis caused by bad bank loans and exposure to devalued Greek bonds, envoys from international lenders were back in Nicosia checking the books to see if the government is living up to its targets as a condition of ongoing loans.
Earlier assessments, Anastasiades said, showed the country was on track and he said there would be no let-up in meeting the reforms. The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) is looking hard at the effect of the crisis on the banks, which are still struggling despite the controls put on withdrawals and businesses.
With record unemployment, banks are struggling to cope with bad loans. Some 46 percent of all loans, or 19 billion euros ($26 billion), are considered non-performing, similar to Greece where big pay cuts, tax hikes and slashed pensions left some 42 percent of loans in the NPL pile.
The government, in return for a 10 billion euros ($13.67 billion) loan from the Troika has had to come up with revenues or cuts equivalent to 13 billion euros ($17.72 billion) because the lenders said the debt would otherwise be unsustainable and couldn’t be repaid.
The deal also saw authorities seize 47.5 percent of uninsured savings in the two largest state banks and impose capital controls while the second-largest lender was shut down.
Anastasiades – as he has a number of times before without coming through – promised yet again that the capital controls limiting depositors to taking out only 300 euros ($409) per day and put similarly strangling ceilings on businesses would be lifted in coming months.