According to information from the Small Business Act (SBA) Fact Sheets, the financial crisis plunged Cyprus into a deep and prolonged recession, which culminated in a liquidity crisis of its banking system. As a result, all Cypriot companies experienced negative growth across the board in the period 2008-12. In the foreseeable future, following the international bailout agreed by the Cypriot government, access to finance for SMEs will be the single most important SBA policy area for the Cypriot government to monitor and to act upon if it is to avoid a retrenchment of the SME sector and of its potential for economic recovery.
Generally, the SME sector saw its value added shrink about 9% and its workforce fall by about 2% between 2008 and 2012. Due to the decline in property activities SMEs in the construction sector were worst hit, with a 20 % drop in added value. In the face of such negative trends, the government is struggling to take the necessary steps to create a competitive business environment for SMEs. Measures already announced in 2011 and 2012 were further delayed, and problematic policy areas for Cypriot SMEs, such as environment, State aid and public procurement, were relatively neglected even if highly problematic for the Cypriot SME sector. Given these economic and policy trends, Cypriot SMEs are facing an up-hill struggle in trying to recover to pre-crisis levels, especially considering the worrying trends in terms of increased bankruptcies and insolvencies for all companies. The most important SBA-related areas of progress in 2012 were in creating a more responsive administration and promoting the upgrading of skills in SMEs and all forms of innovation.
Research, articles, etc.
- SBA factsheet for Cyprus [446 KB]
|Key indicators on access to finance|
Source: Chart compiled using ECB data
Note: Loan volumes and interest rate data for 2013 are to the period September 2013 only (due to data availability as at November 2013).
Download data [69 KB]
Appendix: ACTIONS SUPPORTING ACCESS TO FINANCE FOR SMEs [289 KB]