Cyprus, Greece trade more than $50bn in 2016, US says
Cyprus’ banking system was in disarray and its banks were at risk of collapse when the country declared a debt crisis in November 2016, according to a US government report.
The US Treasury Department on Monday said Cypriot banks were insolvent and had to be liquidated, while Greek Cypriots, including a former finance minister, were seeking to find a way to avoid the worst of the crisis.
The Treasury report said Cyprus had a $25bn sovereign wealth fund and $1.5bn in private bank deposits at the end of December, which it said were safe.
But the report said the country’s banks were “at risk of financial insolvency” and its sovereign wealth account was “in danger of a default”.
“The insolvencies were caused by the inability of Cyprus to repay its debt obligations, which are not sustainable,” the report stated.
“The insolvent banks have been unable to maintain the liquidity necessary to meet the current financial obligations and may experience further insolvences.”‘
Very serious situation’Cyprus is still recovering from a financial crisis that led to the country declaring bankruptcy in late 2016.
It has since reopened and the economy has grown by 8.6 per cent since then.
But it was not immediately clear whether the latest bailout package would address the countrys problems.
In a statement, Cyprus’ foreign minister, Nikos Toskas, said it would not be possible to reopen the banks as the government “would have to take drastic measures to protect its financial system”.
“I think this is a very serious situation.
This is a serious situation that will require drastic measures and we are working on all of them,” he said.
Toskas also said that the government was ready to “take measures to support Cyprus in the future” to “safeguard its financial stability”.
“Cyprus needs to find ways to resolve this situation quickly, and in order to ensure its recovery, we need to get it back to the point where it can continue to pay the debts it has,” he added.
He added that “we have a huge amount of funds that can be used to pay back its debt”.
The Cypriotic finance ministry has not responded to a request for comment.
A Cyprio bank deposit worth $2.5 billion was declared invalid at the beginning of the year, but it has since been re-added to the bank’s balance sheet, making it more secure.