Cyprus on Thursday concluded its multi-billion-euro bailout programme with the European Union's rescue fund as it battles back from a financial crisis that ravaged its banking sector.
In a sign of the Mediterranean island's improving fortunes, the Cypriot authorities did not need the last 2.7 billion euros ($3.1 billion) of the 10-billion-euro loan package, partly funded by the International Monetary Fund.
European Commission vice president Valdis Dombrovskis praised the Cypriot authorities and people for “doing what was needed to heal the economy”.
Cyprus is due to finish repaying loans of 6.3 billion euros from the European Stability Mechanism (ESM) by 2031. It also borrowed around one billion euros from the IMF under the April 2013 bailout deal.
ESM managing director Klaus Regling described Cyprus as “the euro areas latest success story,” following Ireland, Spain, and Portugal which have also exited European bailout programs.
“The country has managed to restore economic growth and repair public finances much faster than expected,” he said.
The Cypriot economy grew 1.6 percent in 2015, the strongest performance in seven years.
The rescue package was hammered out after the Cypriot government agreed to wind down its second-largest bank, Laiki, and impose losses on depositors in under-capitalised top lender Bank of Cyprus.
Cyprus was also required to undertake tough austerity measures that saw wages slashed in the private and public sectors and increases in consumer taxes.
The measures sparked public anger in Cyprus, where dock worker in the second city of Limassol went on strike just last week in protest at government privatisation plans that are part of the reforms.
“The end of the program is not the end of the reform agenda in Cyprus,” Regling said.
“More efforts are needed to reduce the non-performing loan ratio, continue labour market reforms, and maintain fiscal discipline.”