Meanwhile, ratings agency Moody’s released a report yesterday stating the bailout agreement for Cyprus fails to address the island’s fundamental solvency issues, predicting a second memorandum for the struggling island and a continuation of the uncertainty over a possible euro exit.
According to financial news site MNI, Moody’s says if the deal is approved by eurozone parliaments, it will provide Cyprus with much-needed liquidity and reduce its risk of an immediate default.
It adds, however: „Despite the relief from liquidity pressure, Cyprus still faces formidable economic and financial problems. We believe that achieving debt sustainability will likely require additional official support or a restructure of existing debt, and therefore, we expect the risk of default and euro-area exit to remain elevated in the coming years”.
Moody’s notes Cyprus will have to come up with an extra €6 billion through additional taxes, gold sales and potential further imposition on bank depositors.
The ratings agency expects Cyprus’ nominal GDP to contract by at least 12 per cent by 2015.
It adds that the immediate downsizing of the Cypriot banking system „fundamentally impairs the sector’s potential contribution to growth for years to come”.
I-a luat ceva mai mult lui Moody’s dar a ajuns la aceeasi concluzie cu mine.