THE FUTURE'S IS ANYTHING BUT BRIGHT FOR CYPRUS

All the leading credit agencies have slashed Cyprus’s credit rating.  Standard and Poors dropped it to BBB last October, citing among other things the island nation’s exposure to Greek sovereign debt as cause for concern.

Crippled by its exposure to Greece  (Cypriot banks have an estimated exposure to Greek sovereign debt of € 4.2 billion), Cyprus needs funds from the euro zone to recapitalise its banks and to finance the government over the next three years. Without help, it would slide into default, threatening progress made last year in convincing investors that the euro bloc can manage its debt problems.

Euro zone officials have said they expect a decision on a bailout before the end of March.

Officials from the troika of lenders—the European Commission, the European Central Bank and the International Monetary Fund—are working with the Cypriot government to bring the headline figure for the bailout package to about €10 billion.

Higher proceeds from privatizations will contribute to reducing the aid package. A higher corporate-tax rate—to be bumped from 10% to 12.5%—will also add some revenues to Cyprus's coffers.