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Eurozone crisis

Eurozone member Cyprus to lift capital controls by end of year

The central bank of Cyprus has announced the country's current capital controls will be thing of the past by the end of 2014. The restrictions had been introduced to prevent a run on lenders.

Cyprus' central bank chief Panicos Demetriades said Friday he was confident most, if not all, domestic restrictions on bank money transfers and withdrawals would be done away with by the end of the year.

The controls had been imposed to prevent bank clients from emptying their accounts after the country agreed in March of last year to the conditions of an international bailout plan, which among other things mandated a raid on uninsured deposits in the nation's two top lenders.

Since then, Cypriots had not been allowed to use checks or withdraw more than 300 euros per day, as officials had feared the nation might dry up financially within weeks.

Bailout aftermath

Cyprus tries to recover from its crisis

Cyprus News Agency quoted Demetriades as saying that getting rid of all restrictions, including limited transfers abroad, depended on confidence being fully restored in the domestic banking system and on the government making substantial progress in implementing the rescue program.

Nicosia has been praised by creditors from the EU and the International Monetary Fund (IMF) for sticking to a harsh austerity course required under the bailout scheme.

Nonetheless, or because of that, Cyprus has only just reported the 10th successive quarterly decline in its economy, although the drop in GDP in the final quarter of 2013 was lower than predicted by the government.

The forecast now is for the economy to contract by another 4.8 percent this year, before a 1 percent expansion in 2015.

hg/ph (Reuters, AP, AFP)

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