Finance Minister Harris Georgiades said on Wednesday that Cyprus was in the process of stabilising following the messy bailout decision last March, which brought the island’s economy to the brink of collapse.
Georgiades said Cyprus has avoided the risk of a full collapse of the banking system that followed the EU decision to seize people’s deposits to recapitalise banks.
“The worst is behind us as far as the banking system is concerned,” Georgiades said. “We have exited the danger zone and we are now on a correction path.”
The decision led to a closure of the banks to prevent bank runs and the introduction of capital controls, a first for the eurozone.
When the dust settled, Cyprus had lost its second biggest bank, Laiki, while a percentage of deposits over €100,000 were used to recapitalise Bank of Cyprus – the biggest.
The minister reiterated that capital controls will be lifted in the next few months.
Georgiades pledged that the administration will correct the public deficits created in the past, not through additional tax hikes but by rationalising expenditure.
“There is a lot of fat in the area of expenditure and public administration,” he said.