A Memorandum of Understanding (MoU) was signed between Cyprus and Troika along with a loan agreement for 10 billion Euros to be given to Cyprus as financial support.
The MoU required Cyprus government to impose certain reforms, such as salary cuts, cost containments and tax increases that would assist in reducing the debt and overcoming the economic recession as soon as possible. All relevant legislative reforms required by the MoU have already been given Parliamentary ratification.
Troika has recently completed its first review and the assessment feedback turned out to be positive. The Cyprus government achieved better results than the MoU predictions due to the fact that they managed to implement most of the requirements and by successfully reducing the government cost base.
Furthermore, regarding the banking sector, Bank of Cyprus has been restructured and its merge with Laiki bank has been completed. A new board of directors was voted in September that will ensure for a new strategy for the bank. Other than that the rest of the banking system has not been affected.
It is important to note that Cyprus has managed to maintain all major advantages that allow for the country to be considered an International Business Centre. This fact has quashed all the negative forecasts about the future of Cyprus as a business centre. In fact most of the foreign investors continue their business in Cyprus and benefit from all the advantages that the country has to offer.
Other important facts that are worth taking into consideration is that Cyprus economy is small and flexible and it is expected to recover quickly. In addition to that inflation is close to zero and the Anti Money Laundering test has been successfully passed.
Last but not least, Cyprus government has announced further measures to provide additional incentives for investments in the country’s economy.
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