Cyprus has an open,free- market,service- based economy with some light manufacturing. Internationally, Cyprus promotes
its geographical location as a "bridge" between east and West, along with its educated English-speaking population, moderate local
costs, good airline connections, and telecommunications. Cyprus becomes the
fifth eurozone country to receive a bail out after Greece, Ireland, Portugal
and Spain.
Since gaining independence
from the United Kingdom in 1960, Cyprus has had a record of successful economic
performance, reflected in strong growth, full employment conditions and
relative stability. The underdeveloped agrarian economy inherited from colonial
rule has been transformed into a modern economy, with dynamic services,
industrial and agricultural sectors and an advanced physical and social
infrastructure. Earlier this week, the final terms of the Cyprus bailout were
agreed between the small Mediterranean island nation and the European Union and
the IMF, following a protracted crisis that saw the country's banking sector
shut down for the best part of two weeks.
To secure the bailout, Cyprus had to agree that bondholders,
investors and savers in the country's two biggest banks - Bank of Cyprus and
Laiki - take a hit.
Banks that cannot provide that evidence will face pressure to accept
government bailouts or, in extreme cases, be shut down.
The failure of its biggest bank would have grave
consequences for Cyprus, where the economy revolves around financial services —
a result of the island’s appeal as a low-tax gateway to the Middle East and
Africa for companies from Russia and elsewhere in Europe.
The country's political leaders, facing the worst crisis since the
Turkish invasion of Cyprus in 1974, made clear there were tough times to come.
Sushmita Bhandari
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