"It depends what kind of debt you're talking about" said Theodore Panayotou, the director of the Cyprus International Institute of Management (CIIM).
"In this particular case, what was under discussion was Greece's debt to the ECB
, which has nothing to do with Cyprus
and would not have impacted us," he
But we're not out of the woods yet, he
In the future the IMF and EU could decide a new haircut is necessary to make Greece's national debt sustainable.
And if that write-down should relate to private debt, then Cyprus
would be in more hot water.
Cypriot banks hold an estimated €20 billion to €30 billion in loans to Greek private investors - individuals and businesses.
Should Greece default on these, Cypriot banks' recapitalisation needs would soar by that amount overnight - a nightmarish scenario.
On the other hand, the prospect of a Greek default always looms, although Panayotou
thinks the EU would never allow that to happen.
"But with Cyprus
, it's a different story.
We're not too big to fail, and we need to start grasping that," he
said that certain EU countries, such as Germany and Finland, are "itching" to find a scapegoat among the debt-ridden nations that have applied for a bailout.
"They're looking to make an example out of someone.
Being small in size and importance, Cyprus
is a prime target.
It's up to us to stop that."
A loan from the EU/IMF would only buy Cyprus some breathing time, says Panayotou
What the island needs to do in the long term to make its debt sustainable is improve its competitiveness.
Each year Malta attracts around €20 billion in direct foreign investment; by contrast, Cyprus draws just €900 million.
The only remaining competitive edge Cyprus has is its low corporate tax, but that is under assault from countries like Germany, he