And the government has started implementing a sizeable fiscal adjustment, and is carrying out some important structural reforms aimed at improving the functioning of the economy in a durable way. Those measures were painful and they have imposed a large short-term cost on the economy and Cypriot society. But they have started to pay off.
The restructuring and recapitalisation of the banking sector have led to a significant improvement in the health of the financial system. Payment flows have normalised, while the domestic payment restrictions have been gradually lifted. The current account deficit of the balance of payments has almost been eliminated, from a peak of 15.6% of GDP in 2008.