During the five-year period, monetary developments diverged from the targets set in the 1989-93 Five Year Development Plan. Total money supply expanded during this period at an average annual rate of 15,5%, compared to the target of 9,5% which was set on the basis of a similar forecast regarding the G.D.P. The divergence from the target was mainly due to the larger amount of bank credit to the private sector at a rate of 16,5%, compared to the Plan's target of 9,5%, and to some extent also to the fiscal deficit. These developments contributed to the creation of conditions of overheating in the economy, during the first four years of the Plan, which is reflected in the expansion of imports and the aggravation of inflationary pressures.

The Cooperative Credit Institutions also contributed to the creation of conditions of overheating; their credit increased at a rate of 19,5% during the 1989-93 period, increasing their share in the total cumulative credit of the economy in 1993 to 33% from 31% in 1988.

Source: www.kypros.org