The economy in South Cyprus has collapsed and trading is thin with much uncertainty in the air.
Everybody is waiting to hear what the final percentage levy will be on uninsured deposits of over 100,000 euros held at the Bank of Cyprus, the largest bank in the South.
This calculation has been delayed several times but is finally due to be announced today. Expectations are that this levy has increased steadily from 30% to a stonking 60%.
The main reasons for the delays in announcing the final mount of the levy are political.
The Anastasiades government appears to be as inept as the previous administrations in this respect. It should not be forgotten that all the major political parties contributed to the economic mess that the Greek Cypriots now find themselves in.
Unfortunately the same trends are continuing today, the government is running scared of all the special interest groups such as the unions. It was these ‘populist’ policies that allowed for the near collapse of Cyprus Airways, the huge build-up of debt in Laiki bank and uncontrolled growth of the offshore banking industry.
Attempts to provide a sop to the proposed austerity programme, 500 fewer job cuts for state employees, putting back the privatisation programme, scrapping longer hours for teachers etc. has undermined the effects of the programme. These manoeuvres point to weak leadership and pandering to the unions as have governments done in the past. The government’s eye is on re-election not solving the dire economic problems beleaguering the South.
All the calls for naming guilty parties and tribunals cannot hide the fact that present governing party, DISY contributed as much as the previous government, AKEL to the current situation.
Rumours were circulating last week that co-operative bank deposits were to be included in the haircut despite official denials. There were long queues at the banks as customers attempted to withdraw their cash or split deposits into amounts less than 100,000 euros.