Republic of Cyprus budget savings due to borrowing from the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF) in 2016 reached 2.1% of GDP (€0.4 billion).
According to the data released on Wednesday by the ESM, the organisation submitted €6.3 billion of the €10 billion package which had been approved for the funding of Cyprus as part of attempts to save the economy.
The ESM makes its estimates on budget savings by comparing the loan payments at the EFSF/ESM interest rate, with the interest rate the countries would have had to pay if they tried to finance themselves through the market.
Among the member-states which received financial assistance from EFSF and ESM since they no longer had access to the markets are Cyprus, Greece, Ireland, Portugal, and Spain. They all received loans at much lower interest rates than those they could get in the markets.
As the ESM notes, these loans led to great savings in the budget of the above countries, and are a true offer of solidarity from the Eurozone partners which is often ignored.
According to the ESM calculations, the savings in the budget of Cyprus reached 2.1% of GDP or €0.4 billion in 2016, 1.9% of GDP (€0.3 billion) in 2015, 1.6% of GDP (€0.3 billion) in 2014, and 0.7% (€0.1 billion) in 2013.
The greatest beneficiary of the funding was Greece, with savings in the country’s 2016 budget due to ESM/EFSF loans reaching 5.6% of GDP (€9.9 billion).
Also mentioned is the fact that for other countries, during the peak of the crisis, savings were even greater.
Towards the end of 2013, countries such as Ireland, Spain and, to a smaller degree, Portugal, were close to completing their programmes and benefited from lower spreads due to the effective response to the crisis and the well-implemented ESM/EFSF programmes.
The data also show that the effect of cheap loans exceed the period of the programmes and will last for additional years.