March 31, 2014 / 8:11 AM / 4 years ago

UPDATE 1-Eurogroup head says optimistic on Cyprus recovery

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NICOSIA, March 31 (Reuters) - Eurogroup President Jeroen Dijsselbloem said on Monday he was optimistic that the Cyprus economy could recover from a crisis that rattled the foundations of the euro zone a year ago and pushed the island to the brink of bankruptcy.

“I think there will be difficult times ahead, and yet I think there will be a new perspective for the economy of Cyprus ... I think the economy of Cyprus has shown to be dynamic and flexible, and therefore I am optimistic that Cyprus will recover within a short period of time,” Dijsselbloem told reporters in Nicosia.

Cyprus teetered on the brink of financial meltdown in March 2013 after it was forced to wind down a major bank and seized savings to recapitalise a second bank to qualify for 10 billion euros in aid from the European Union and the IMF.

It was the first time in the history of the euro zone that uninsured deposits were seized to recapitalise a bank instead of passing the burden onto EU taxpayers.

“We considered different options, but this option that came out was, in the given circumstances, unfortunately inevitable,” Dijsselbloem said. Cyprus is now following a three-year adjustment programme which includes privatisations and a tapering of public spending.

Reporting by Michele Kambas; Editing by Mark Heinrich

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