The cost of the explosion at the naval base reaches 13.8% of the Cyprus GDP, according to Credit Suisse

The economic impact of the explosion at the naval base “Evangelos Florakis” are estimated at 2.4billion euros, representing 13.8% of the Cyprus GDP, according to estimates by Credit Suisse.

According to a report on the situation in Cyprus, published by the daily “Filelftheros”, CS estimates the cost to rebuild the power station in Vasilikos is expected to reach 1.5 billion or 8.6% of the GDP. However if the cost covered by the insurance is considered the total cost is reduced to 900 million or 5.2% of the GDP.

Indirect effects will arise from the blackouts and the shortage in water supplies because of problems with the desalination units.

Also, there will be adverse effects from the increase in electricity prices both because of the imbalance between supply and demand but also by the fact that the station was the cheapest cost producer in the country.

It is estimated that the cost of increased prices to rise to 660 million, or 3.8% of the GDP.

The damage to tourism is estimated at 200 million, or 1.1% of the GDP.  CS maintains that the power cuts also affected hotels.

In the report the CS notes that the performance of Cypriot bonds increased by 100 basis points this week.

Noted that the public debt to GDP is at a low 62% but a further increase of 100 basis points in borrowing costs and 15 percent of debt to GDP would increase the deficit by 1.8% per year.

CS did not give details on the basic assumptions on which the effects were calculated.



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