Cyprus sought to play down fears that its financial crisis would hit the Mediterranean island’s large shipping registry and the ship-management industry.
The transport ministry said it was business as usual for shipping as banks reopened today after a two-week closure during negotiations with the European Union and the International Monetary Fund over a 10 billion euro ($12.8 billion) bailout to prevent the collapse of the banking sector and the broader economy.
The government postponed the deadline for the payment of registry fees and tonnage tax from March 31 to April 15 and said companies that met the new settlement date would not face surcharges.
The government assured shipowners and managers that the current crisis, which has seen the controversial imposition of capital controls in the eurozone for the first time, would have “no direct or indirect” impact on its tax system for shipping.
Cyprus has the world’s ninth largest fleet, measured by tonnage, and accounts for around 20 percent of the European Union’s fleet. It is the world’s third largest ship-management center.
Ship-management companies, many of which are German firms running container ships, employ almost 5,000 people in Cyprus, and Cypriot-registered vessels are estimated to employ a further 50,000 seafarers.
The maritime industry is reckoned to account for around 6 percent of Cyprus’s gross domestic product, or some $1.8 billion a year.
Despite the ministry’s assurances, the crisis appears to be having an effect on the island’s shipping sector, particularly management companies that stand to lose a large slice of their deposits with Laiki Bank, which is being closed down, and Bank of Cyprus, which is being restructured.
The government is expected to skim off around 40 percent of deposits above 100,000 euros ($128,000) at both banks to help raise 5.8 billion euros ($ 7.4 billion) to qualify for the EU-IMF bailout. This could cost individual ship-management companies millions of dollars, raising fears some may move their operations to other maritime hubs.
Meanwhile, thousands of containers are reported to have accumulated at the port of Limassol as consignees were unable or reluctant to pay for delivery while banks were closed.