NICOSIA – Cyprus’ high vaccination rate and stricter health measures to deal with the lingering COVID-19 pandemic are helping the economy come back even though the fight against the Coronavirus is going on.
“Cyprus is recovering faster than expected and conditions are set for sustained growth in the medium-term, although subject to the evolution of the pandemic and the implementation risks of the EU funds.” DBRS Morningstar ratings agency Vice President Javier Rouillet said.
“We expect this positive macroeconomic backdrop should facilitate a continued improvement in Cyprus’s public finances and help banks to continue their balance sheet repair efforts,” Rouillet added, The Cyprus Mail said.
The comeback has been more than eight years in the making, since a 2013 crisis caused by banks holding devalued Greek bonds and big loans to Greek businesses that weren’t fully repaid.
That led then newly-elected President Nicos Anastasiades to break a vow not to let banks seize accounts, allowing them to confiscate 53.5 percent of those over 100,000 euros ($112,850,) nearly wiping out the life savings of many small businesses and account holders.
Cyprus needed a 10-billion euro ($11.62 billion) international bailout that came with tough austerity measures and drew violent protests that Anastasiades weathered and then won re-election despite breaking promises.
The credit ratings agency said that reforms made after that have helped bring back the economy that was further held down by lockdowns in the pandemic that in 2020 deeply cut into tourism, the biggest revenue engine.
“The Cypriot economy has so far proven to be more resilient to the Coronavirus crisis than initially expected,” the report said.
“Compared with other southern European economies, which also have important tourism-related activities, Cyprus’s recovery has out-performed all but Greece,” the report added, showing a track of 5.3 percent growth.
DBRS Morningstar said the government’s fiscal support during the pandemic was “targeted and sizable,” saying that it helped the country to cope with decreased domestic demand.
Cyprus entered the COVID-19 crisis, following a period of substantial improvement in terms of fiscal and banking system consolidation, private sector deleveraging and strong growth,” the report said.