Cyprus Financial Crisis: How, When & Why

The Cypriot financial crisis was generated by the exposure of Cypriot banks to the Greek debt haircut, the downgrading of the Cypriot economy to junk status by international rating agencies and the inability of the government to refund its state expenses.

In September 2011, just 2 months after the Evangelos Florakis Naval Base explosion, the credit rating of Cyprus was downgraded by all major credit rating agencies. Despite Cyprus's population and small economy, the island has a large off-shore banking industry that was shaken to its foundations during the financial turmoil. With a total amount of €19.5 billion, the country was unable to stabilize its banks.

A report published a year ago by a team of 16 Cypriot economists attributes the causes of the crisis to sliding competitiveness and increasing public and private debt that were exacerbated by the banking crisis.

Since January 2012, Cyprus has been relying on a €2.5 billion emergency loan from Russia to cover its budget deficit and re-finance maturing debt. The loan has an interest rate of 4.5% and it is valid for 4.5 years. It was originally expected that Cyprus would be able to fund itself again by the first quarter of 2013. When Fitch downgraded bonds issued by Cyprus to BB+ last June, the Cypriot government requested a bailout from the European Financial Stability Facility or the European Stability Mechanism

The Cypriot government expressed disagreement over the bailout terms, and continued negotiation with Troika representatives concerning possible alterations to the terms throughout the following months.

On November, the government handed its counter-proposals to the Troika on the terms of the bailout. The bailout terms were made public on 30 November.They include strong austerity measures, including cuts in civil service salaries, social benefits, allowances and pensions and increases in VAT.

On 16 March 2013, the EU and International Monetary Fund agreed a €10 billion deal with Cyprus. As part of the deal, a one-off bank deposit levy of 6.7% for deposits up to €100,000 and 9.9% for higher deposits, was announced on all domestic bank accounts. Savers were due to be compensated with shares in their banks. Measures were put in place to prevent withdrawal or transfer of moneys representing the prescribed levy.

The deal required the approval of the Cypriot parliament, which was due to debate it on 18 March. According to President Nicos Anastasiades, failure to ratify the measures would lead to a "disorderly bankruptcy" of the country.

The Russian government "blasted Cyprus's bank levy, piling more pressure on Nicosia" ahead of the parliament's vote on the bailout. Russia has decided to extend its existing loan to Cyprus but hasn't shown interest in doing more as reports say that Russia felt betrayed due to Mr. Anastasiades friendly moves towards Europe.

The deal was rejected by the Cypriot parliament on 19 March 2013 with 36 votes against, 19 abstentions and one not present for the vote.

Cyprus is now the center of attention for all European States and even for more.
It's strange how an island that small can influence all west countries that much, isn't it?

By: Progress On 23:18

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Eurocypria of Cyprus goes belly up, leaving thousands of tourists in the lurch

The Cypriot Charter Airline Company Eurocypria with its ongoing financial challenges finally announced on Thursday an indefinite suspension of all flights. This desperately bad news for Cyprus Tourism is expected to disrupt the travel arrangements of thousands of international tourists.

The state-owned board of Eurocypria made this desperate announcement after its 320 staff declared an indefinite strike over job losses. Rumours surrounding the airline seems have impacted on the distraction of its staff, which by some reports compromised air safety.

More specifically the Company stated "The executive board has decided to indefinitely suspend the company's flight programme from midnight, November 4,". The  board went onto advise the Government in the capacity of sole owner to proceed with entering the process of the Company liquidation at the earliest juncture and moreover to seek alternative employment for the Companies existing employees.

As the dust settles, it appears that Eurocypria were in such serious financial difficulty, that in essence it was the core reason why its flight programme could not operate under "conditions of absolute safety."

The Government on the Island of Love declared that it can no longer manage 2 national airlines and that it desires to save the National carrier Cyprus Airways (CA) which earlier posted H1 losses of 25 million euros.

The liquidation and eventual closer of Eurocypria is expected to affect an estimated 15,000 tourists. The greatest impact to of which will come from the markets of Germany and Russia. Cyprus Airways may however undertake some if not all of the routes.

The strategy of the Government is likely to feature the implementation of a voluntary retirement scheme, which will be true for both airlines, in order to  allow Cyprus Airways to absorb as many of the unfortunate staff of Eurocypria as possible. All this said, the Government of Cyprus still needs EU approval (following state aid rules for Cyprus Airways to absorb the staff and services of Eurocypria).

On the Political front opposition MPs jumped on the bandwagon to accuse the current Government of gross mismanagement of the Country’s funds. Other Politicians estimate that Eurocypria's debts may actually exceed a stunning 56 million euros in total, well over double of the purchase price, as it was only in 2006 when the state bought Eurocypria for 23 million euros from Cyprus Airways, for which it has a 70% stake to prevent the more established airline carrier from going bust.

By: Progress On 15:08

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The best kept secret in Cyprus, Agii Anargyri Natural Healing Spa Resort

 

Are you a fan of agricultural tourism? Looking for a place to go this spring? Well, look no further. On the beautiful island of Cyprus, in the mountains that are home to the Wine Routes of Cyprus, 20 minutes from the town of Paphos, one can discover a real heaven in the form of a Spa Resort!       

Agii Anargyri Natural Healing Spa Resort opened its doors in May 2009 presenting a world with a sublime experience. Set in a valley of mature trees, the resort offers a unique retreat, a place of profound calm and the opportunity to enjoy the health-giving waters which have benefited visitors of the area for so many years.

The spa hotel has been extended, renovated and refurbished in natural stone and timber in traditional Cypriot architectural style. It is set amid fragrant citrus groves and other mature trees. The area teams with plant and animal life, but at night peace descends. The silence is broken only by nightingales, the occasional owl and sometimes a chorus of frogs.

Back in 1983 Zenon, a local man, acquired the land. At the time, the property was unattended and suffering from the effects. With a vision in his mind and an appreciation to the almost magical qualities of the Nerades Valley in which Ayii Anargyri is situated, Zenon worked with it daily to make it a heaven that people could go to escape their routine.

Sadly Zenon's life was ended by a tragic accident in 2003 but his vision has been taken up and carried forward by his closest family.

This beautiful boutique hotel with accommodation for 150 guests, in Garden Suites, Bungalows or Classic rooms, has dedicated spa facilities in the grounds, a generous swimming pool and conference facilities for 100 people.

Room Facilities include: TV (Satellite), Air-Conditioning & Heating, Hair-Dryer, Bath-shower-W/C, Luxury Furnishings, Internet Facilities, Telephone.

At the spa, great care has been taken to provide therapies which will benefit both body and soul. These include: a yoga retreat, meditation, holistic massage treatment, holistic healing, and distant natural holistic healing. Of course, if you just need to shed a few pounds to get back in trim the experienced staff can help there too with a custom-designed weight-loss program.

Ayii Anargyri has something unique. The hotel provides the means to benefit from the time-tested remedies of the mineral rich waters which flow in the area. From the Cyprus hillside, a spring carries the soothing waters renowned for generations for their healing qualities. This remarkable stream has been channeled to the spa where it is combined in numerous treatments now advanced by modern science. Private rooms suitable for one or two people are available.

Four rooms nestle beneath the exquisitely decorated dome of our Total Experience Suite. They offer sensation and relaxation beyond belief. In a rich hamam style environment the body is soothed and cleansed, and the mind made still.

The four different environments introduce the benefits of Herbal Steam, Rustic Sauna, temperature-controlled Rasoul Baths, and the latest Chromatherapy. The Total Experience Suite  brings all the senses in harmony.

At the hotels restaurant modern cuisine takes its inspiration from the past. Cuisine from locally grown produce will reveal all that is best in traditional Cypriot fare; food that is garden fresh, nutritious and flavorsome. The resort's own vineyard produces a fresh clean vintage well worth sampling and available at the Cava. An extensive range of international and Cypriot wine is also to hand at reasonable prices. As a bonus, the Cava can be reserved exclusively. Chef will prepare a meal to order and it will be served to guests here.

An abundance of scenic attractions will delight any nature lover. Also outdoor pursuits like cycling, walking and bird watching are just a few other possibilities to make your stay a tonic for body and mind.

If golf is your thing, three great courses are located in the vicinity. In fact whatever your sport, the staff can put you in touch with the right people to make your stay memorable for all the right reasons.

Further Information: www.ayiianargyrisparesort.com

Maria Andreou

Co Publisher 

By: Progress On 05:41

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