The Bank of Cyprus, the island's largest financial institution, on Monday urged government action to prevent the eurozone country from having to seek a bailout from the European Union. "With our inaction we are risking the ability of refinancing the state and the consequences will be instant and serious," a statement from the commercial bank said. "There is an immediate threat of the country entering the European Union's support mechanism with everything bad that entails." State Central Bank governor Athanasios Orphanides warned last month that Cyprus could be headed for a bailout following a massive munitions blast that claimed 13 lives and knocked out a key power plant on July 11. "More drastic measures must be taken immediately," Orphanides, a member of the European Central Bank's governing council, said in a letter to President Demetris Christofias. On Monday, the Bank of Cyprus said: "Time has run out. We are at that turning point at which history will judge us. It's time for immediate and effective action." It said political dithering and inaction was sending wrong signals to credit agencies and international markets that Cyprus does not have the necessary leadership to turn things around. "Each day of inaction accelerates the problem and the risks, so we must act today and not tomorrow," the bank said. "Markets move rapidly; indecision, disagreements or simply talking without taking action are punished, while courageous decisions are rewarded," it said. The bank said bold decisions need to be taken to prevent a downward spiral and ensure long-term economic growth, otherwise the island's reputation as a regional financial centre would "erode." Its plea comes after ratings agencies Moody's along with Standard and Poors last week downgraded Cyprus based on concerns over its economy and budget. Since last month's deadly blast at the naval base, Cyprus has been in political and economic turmoil which last week saw the resignation of Christiofias's entire cabinet. He has yet to appoint a new government, meaning that essential austerity measures are delayed until he does so. S&P said that between 2008 and 2010, the budgetary position shifted from a surplus of just under 1 percent of GDP to a deficit of 5.3 percent. The government had hoped to lower the deficit to below 4 percent this year and under the EU's 3 percent ceiling in 2012. The finance ministry said on Monday that the state has "no significant financing needs until mid-December 2011." But it stressed that "immediate and effective structural and financial measures were absolutely essential to secure the necessary financing for the state unhindered." Official projections that the economy would grow by 1.5 percent this year and by 2.5 percent in 2012 have been scrapped after the explosion and destruction of the power plant. Preliminary estimates put GDP growth at zero for this year and around one percent next year. Estimates to rebuild the post-blast economy are put at a total of between two and three billion euros (2.88 and 4.3 billion dollars), with rebuilding the devastated Vassiliko power plant alone put at a minimum of 700 million euros. According to treasury figures, the fiscal deficit for the first six months of 2011 ending in June widened to 3.47 percent of GDP, compared to 1.89 for the same period last year. Over the same six-month period, public expenditure increased 9.15 percent while the bloated state pay roll increased 3.95 percent on H1 2010.