World Economy

Cyprus Lifts Capital Controls as Banks Recover

Cyprus Lifts Capital Controls as Banks RecoverCyprus Lifts Capital Controls as Banks Recover

Cyprus is lifting the last remaining capital controls it imposed on its banking system during the financial crisis of 2013. The controls were eased in January.

Cyprus was the only crisis-hit eurozone country to restrict capital transfers, as it faced a run on the banks, BBC reported.

There will no longer be a monthly cap of €20,000 ($22,000) on transfers by individuals to foreign banks, or of €10,000 for travelers moving money out of the country.

Cyprus received a €10b bailout from the EU and International Monetary Fund (IMF) after its biggest banks nearly collapsed in March 2013 because of huge losses on their Greek investments.

The island’s second-biggest lender, Cyprus Popular Bank (also known as Laiki Bank), was wound up and deposits worth more than €100,000 in the largest bank, Bank of Cyprus, were seized.

Those measures were part of the deal to ensure that Cyprus funded part of the €10b bailout.

  Island Recovering

Speaking on Friday, Cyprus President Nicos Anastasiades voiced confidence that the Mediterranean island was recovering well, despite three years of recession.

Lifting capital controls, he said, was “a vote of confidence in our banking system which, now fully independent of Greek banking institutions, can move forward”.

The Greek debt crisis had a severe impact on Cypriot banks, which lost about €4.5b worth of Greek sovereign bonds – equivalent to 25% of Cypriot gross domestic product, Reuters news agency reports.

  Want Speedier Procedures

Significant conclusions as to how foreign investors active in Cyprus see the island as well as to the problems they face have emerged from a survey – the second in two years – carried out by the Cyprus Investment Promotion Agency (CIPA). The results of the survey were presented at an event in Nicosia.

The survey was carried out for CIPA by NOVERNA Analytics and Research with the participation of 119 foreign-owned companies active in Cyprus, primarily in shipping, consulting and financial services, energy and another 15 sectors of the economy. The survey’s main aims were to appraise Cyprus as a business center and investment destination, the extent to which foreign investors are satisfied with Cypriot services, but also to evaluate the Cyprus economy more generally.

Presenting the results of the survey, CIPA Director General, Charis Papacharalambous said foreign investors had voiced optimism about the course of the economy, recognizing the growth prospects Cyprus offers. They had a positive view of the country’s tax system, the legal environment, the level of professional services and the reliability of the human resources, the quality of life and low rate of crime.

They cited lack of confidence in the banking system, long delays in public sector procedures, the delay in decision-making at political level as well as the high cost of life as Cyprus’ main disadvantages.

Moreover, foreign investors consider that Cyprus has room for improvement in forging a national economic/investment strategy and in offering incentives to investors.

As the survey shows, foreign investors are monitoring the changes taking place in the Cyprus economy and wish to see the speediest possible implementation of the planned strategic reforms and the structural changes which aim to make Cyprus more hospitable to foreign investments.