The headquarters of the International Monetary Fund (IMF) in Washington, D.C.
The International Monetary Fund (IMF) says substantial risks still loom for the Cypriot economy even after a multi-billion dollar international bailout aimed at averting a debt default.
In a report issued on Friday, the IMF predicted a deep recession in Cyprus this year and next and said there is a danger that the downturn could be even more severe if authorities do not adhere strictly to conditions imposed as part of the $13-billion bailout deal.
The international body predicted that Cyprus should return to growth in 2015 after three years of deep recession. The IMF added that the country will need to ensure that its sweeping austerity program does not slip off the tracks.
Cyprus became the fourth euro-zone country to tap IMF aid in Europe’s sovereign-debt crisis, which has entangled the finances of banks and nations in a mutually destructive spiral.
Cyprus had to meet certain conditions to obtain the bailout funds. They included forcing depositors to take major losses on savings over 100,000 euros in the country’s two biggest lenders to help plug the country’s financing needs.
The IMF report served as a stark warning to Cypriot authorities not to loosen strict implementation of the bailout deal’s tough terms.
The IMF said there are substantial risks that the negative effects of the crisis could be even worse than what is currently anticipated. It said the impact of the banking crisis on economic growth is “highly uncertain” and an economic slump could result in a “vicious cycle” of bankruptcies, drops in real estate prices, bank losses, and unemployment.
EKA/MHB
This article originally appeared on : Press TV