Economy of Cyprus
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Date: 2018-12-28

Economy of Cyprus, by Wikipedia https://en.wikipedia.org/wiki?curid=5598 / CC BY SA 3.0

Economy of Cyprus

The economy of Cyprus is classified by the World Bank as a high-income economy, and was included by the International Monetary Fund in its list of advanced economies in 2001. Erratic growth rates in the 1990s reflected the economy's vulnerability to swings in tourist arrivals, caused by political instability on the island and fluctuations in economic conditions in Western Europe.

On 1 January 2008, the country adopted the euro as its official currency, replacing the Cypriot pound at an irrevocable fixed exchange rate of CYP 0.585274 per EUR 1.00.

The 2012–13 Cypriot financial crisis, part of the wider European debt crisis, has dominated the country's economic affairs in recent times. In March 2013, the Cypriot government reached an agreement with its eurozone partners to split the country's second biggest bank, the Cyprus Popular Bank (also known as Laiki Bank), into a "bad" bank which would be wound down over time and a "good" bank which would be absorbed by the larger Bank of Cyprus. In return for a €10 billion bailout from the European Commission, the European Central Bank and the International Monetary Fund, the Cypriot government would be required to impose a significant haircut on uninsured deposits Insured deposits of €100,000 or less would not be affected. After a three-and-a-half-year recession, Cyprus returned to growth in the first quarter of 2015. Cyprus successfully concluded its three-year financial assistance programme at the end of March 2016, having borrowed a total of €6.3 billion from the European Stability Mechanism and €1 billion from the IMF. The remaining €2.7 billion of the ESM bailout was never dispensed, due to the Cypriot government's better than expected finances over the course of the programme.

Cyprus has an open, free-market, service-based economy with some light manufacturing. Internationally, Cyprus promotes its geographical...