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Public Debt Management Annual Report 2011
The year 2011 was marked by developments in the euro area that will drastically shape the European and global economic history.
Cyprus, a small open economy, with a banking sector equivalent to six times the GDP of the country, excluding foreign banking institutions operating in Cyprus, joined the eurozone (EMU) on 1st January 2008, after having successfully passed the rigorous evaluation of all EU Institutions. After the accession to the EMU, Cyprus achieved positive credit ratings. Cyprus, during its EU preaccession phase, proceeded with harmonising its legislation which, even since 2002 has prohibited government borrowing from the Central Bank. Also, the government at that time abolished the sinking funds which were intended for the repayment of Government Registered Development Stock (GRDS) at maturity. In addition, the foreign exchange restrictions were removed. The above-mentioned institutional adjustments have rendered the Cypriot Government fully dependent on the markets as regards its financing.
Cyprus, a small open economy, with a banking sector equivalent to six times the GDP of the country, excluding foreign banking institutions operating in Cyprus, joined the eurozone (EMU) on 1st January 2008, after having successfully passed the rigorous evaluation of all EU Institutions. After the accession to the EMU, Cyprus achieved positive credit ratings. Cyprus, during its EU preaccession phase, proceeded with harmonising its legislation which, even since 2002 has prohibited government borrowing from the Central Bank. Also, the government at that time abolished the sinking funds which were intended for the repayment of Government Registered Development Stock (GRDS) at maturity. In addition, the foreign exchange restrictions were removed. The above-mentioned institutional adjustments have rendered the Cypriot Government fully dependent on the markets as regards its financing.