Cyprus 

Cyprus country policy

Policy established 28 May 2007

• No Restrictions
• The country ceiling is 2000 mln euro
• Early warning signal 500 mln euro
• - of which was used as at 2010-07-31 495 mln euro

Country class: 0

Cyprus country facts

Atradius DSB Economic Research
Country Report last updated :  29 March 2007
Country :  CYPRUS  

Political Situation
Still Divided Island

Head of state
President and p.m. Tassos Papadopoulos ((Mehmet Ali Talat in the Turkish part).

Form of government
Coalition of the centre-right Democratic Party (Diko) with the Communist Party (Akel).

Internal Economic Situation
More Dynamic

General situation
More dynamic since EU accession in 2004: lower interest rates, extra capital inflow. The 2006 GDP-growth (+3.8%) was driven by buoyant activities in the financial services, construction and retail sales, compensating for a fall in tourist arrivals. Rapid credit growth has fueled asset prices. The risk of Cyprus missing its inflation target for adopting the euro, receded after the rate of inflation eased to 1.4% in Jan 2007. The Turkish Cypriot economy is lagging (GDP per capita half the island’s average) and due to international embargo totally dependent on aid from Turkey.
 
External Economic Situation
Despite Weak Solvency Ratios, Good

Main sources of foreign exchange
Tourism, services, textiles/clothing, leather, food; re-exports.

Main foreign markets
EU (60%), Middle East (9%).

Main expenses of foreign exchange
Consumer goods, energy.

Balance of payments
Very large surplusses on the service/transfer account are financing the huge trade deficits (> 20% GDP). Gradual lifting of financial and capital market controls have completed the financial liberalisation process, prerequisite for EU-entry.