The drop was mainly on the phasing out of the €1bn government guarantee extended to Bank of Cyprus, the PDMO, a division of the finance ministry, said in its 2016 annual report on Friday. All government guarantees carry no exchange rate risks.

“By taking out guarantees to general government bodies, the net value of the government guarantees was €1.6bn or 9% of gross domestic product,” the PDMO said, adding that an amount of €329m in guarantees is already incorporated in public debt, which rose last year to €19.3bn.

The government issued guarantees totalling €224m to the European Finance Stability Fund, the predecessor of the European Stability Mechanism which finances bailouts in the euro area, €183.6m to private corporations, mainly banks, €1.1bn to utilities such as sewage boards, and other governmental agencies, €314.4m to the local administration, and €154.4m to individuals mainly in the form of housing loans to vulnerable groups, the PDMO said.

Source: Cyprus Mail