Cypriots Gather Cash as Suppliers Demand Hard Currency for Goods

Cypriots hunted for cash as banks remain closed for a third day and suppliers from gas stations and pharmacies to retailers demanded hard currency.

“There is a shortage of cash in the market,” Costas Georgallis, chairman of the Nicosia Chamber of Commerce and Industry, said by telephone today. “Containers are trapped at harbors and we can’t get cargo through customs because this must be done in cash and we can’t get cash.”

The Cyprus central bank announced yesterday that lenders will remain closed today and tomorrow, effectively barring Cypriots from their accounts until March 26 when they are due to reopen after a national holiday. The decision was made to “ensure financial stability” after lawmakers rejected a proposed levy on bank deposits and the government seeks alternatives to rescue the island from a funding crisis.

Supermarkets have started to only accept cash and people are queuing up at automated-teller machines. The central bank instructed lenders on March 19 to keep their ATMs stocked with cash. Gas stations are running low on fuel and there are the first signs of shortages on store shelves.

“Everything is at a standstill, and with the extension of the closure, problems are being created,” Michalis Pilikos, general director of the Federation of Employers and Industrialists, said on state-run CyBC today.

Paying Wages

Georgallis at the chamber of commerce said he has sent two people to raise money from ATMs to pay a proportion of employee wages tomorrow so they have money through the long weekend.

He said there are “problems” with supplying supermarkets, pharmacies and some gas stations have shut.

“There is absolutely no reason to worry about the availability of drugs from private and state suppliers,” Health Minister Petros Petrides said on CyBC today. There is enough supply to meet demand for as long as six months, he said.

President Nicos Anastasiades met with party leaders in Nicosia today to hammer out an alternative plan to raise 5.8 billion euros ($7.5 billion) after parliament rejected the initial proposal by euro area finance ministers to impose the levy on deposits. Any plan must be approved by the troika of the European Commission, European Central Bank and International Monetary Fund.

The ECB said it will cut Cypriot banks off from emergency funds after March 25 unless the Mediterranean island agrees on a bailout with the EU and IMF.

“I expect there will be a program of support for Cyprus by Monday,” Cyprus Central Bank Governor Panicos Demetriades said as he departed from the political party leaders meeting.

To contact the reporter on this story: Georgios Georgiou in Athens at ggeorgiou5@bloomberg.net

To contact the editor responsible for this story: Maria Petrakis at mpetrakis@bloomberg.net