Georgiades expects Cyprus recession to be less than expected

Cyprus’s finance minister said an expected contraction in the island’s economy after this year’s international bailout would be less severe than expected by the country’s lenders.

Speaking to Reuters on Tuesday during a six-hour trip to London, Haris Georgiades said the impact of austerity measures imposed by the European Union as a condition of the bailout was overdone and the country’s banks would not need additional aid.

The rescue by a group of international lenders known as the troika saved Cyprus from bankruptcy and was the first in the eurozone crisis to see the savings of firms and richer individuals seized to prop up damaged banks.

Georgiades said Cyprus’s economy had proved more resilient to the upheaval than expected and had received a small lift from an uptick in the eurozone economy.

“Despite the difficulties and the magnitude of the decisions we have taken, at all levels we are doing much better than expected,” Georgiades said.

This year’s economic contraction “will be 2 percent less than assumed… I think it’s going to be 7 percent,” he said.

“Our efforts on the fiscal dimension remain firmly based on very, very conservative assumptions… more conservative than the troika assumptions. We want to be on the safe side.”

The troika expects a 3.9 percent economic contraction next year.