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And then there was one. If all goes according to plan, eurozone finance ministers will bid a fond farewell to the Cypriot bailout on Monday, making the island nation the fourth of the five countries that were forced into a rescue programme at the height of the crisis to exit. Only Greece remains.
In many respects, the Cypriots have been model bailout students. Nicosia only spent about €7.5bn of the €10bn originally allocated in the programme, and its economy returned to growth last year, a full year earlier than the bailout’s architects anticipated. Indeed, it has out-performed on almost every major economic indicator: its debt levels are lower than originally forecast, its projected budget deficit isn’t a deficit, and its current account is almost in balance.
Still, not everything is so rosy. Most importantly, the bailout will end without the Cypriot government completing all the reform tasks it was supposed to – the privatisation of the state telecommunications operator proved too politically radioactive so close to parliamentary elections, so won’t be done in time. As a result, Monday’s eurogroup meeting will be a farewell, but not a formal closure of the programme. That will happen at the end of the month when the three-year rescue just expires. Read more