Cyprus, the small Island neighboring crisis struck Greece, is on the verge of following in the footsteps of its nighbor. Michalis Sarris, Popular Bank’s chairman is pleading for help to help the nation through its financial crisis.
Sarris believes that if Europe does not help, the Cypriots are going the way of the Greeks.
The bulk of the country’s GDP is tied to Greece’s financial condition, which means if Greece leaves the Euro zone, Cyprus might.
According to Demetris Christofias, the president of Cyprus, “Cyprus also was looking at contingency plans if Greece leaves the euro, because his country’s financial system’s exposure to Greece is estimated to be more than its total gross domestic product,” reports said.
Cyprus’ debt is rated below the investment grade, ten years are yielding 14%.
Additionally, the country’s finance minister labeled the current situation in Cyprus as “an important crunch time,” This means that Cyprus is faced with vital decisions to make in the coming few weeks, which could effect the very future of the nation.
Cyrpus might need Euro money, which has so far been provided to Greece, Ireland and Portugal. If so, “it will become the fourth Euro Zone country to receive bailout under Euro’s temporary bailout fund“, the Wall Street Journal notes.
In an earlier post, we mentioned that the current Greek crisis was similiar to reflect financial crisis of 2008/2009. We are yet to rule out such a scenario if Europe does not solve things very quickly. The acronym PIIGS, for Portugal, Ireland, Italy, Greece and Spain should now be renamed CPIIGS.