No sector of the Cypriot economy is immune from the banking crisis that is eroding morale and squeezing cash out of the system.
Even sales at the cheaper end of the scale are down. Stallholders selling fresh fruit and vegetables in the capital Nicosia have seen sales halved.
“Sales are down by around 50 percent, people don’t buy the goods they used to, just the basics, mainly potatoes,” one trader explained.
The island’s banks have been hit hard, there is no trust and the rescue plan means they stand to loose huge amounts of money.
Stavros Zenios, a professor of economics at the University of Cyprus, said: “The Cypriot economy is sailing into unchartered waters. The decision has had a positive affect in terms of cleaning up the banking system, however it has hit services that amounts to some 20 percent of the country’s GDP.”
Our correspondent in Nicosia, Stamatios Giannisis, said the hardship looks set to continue: “Cypriot banks have been closed since March 16 and with every day that passes life gets harder for individuals and businesses. Even when the banks do reopen problems will remain as there will be serious limitations on all withdrawals.”
The Cyprus bank bailout
- The bailout will mean a significant restructuring of Cyprus’ banking sector
- The country’s second largest bank, Laiki bank, will be split into two parts, a “bad bank” and “good bank”, before being closed, incurring thousands of job losses
- Deposits in Laiki bank of less than 100,000 euros (effectively the “good bank”) are insured by EU law and will be transferred to the country’s biggest bank, Bank of Cyprus
- Deposits in Laiki bank of more than 100,000 euros are not insured by EU law and will be put into the “bad bank”
- Deposits in this “bad bank” and deposits of more than 100,000 euros in Bank of Cyprus will be frozen and used to pay Laiki’s debts and recapitalize Bank of Cyprus. These uninsured depositors will have to face forced losses of up to 40% on their deposits