Press Releases

It is a great pleasure to join you at the 26^th Annual General Meeting of the Cyprus International Businesses Association (CIBA) and an honour to address such a distinguished audience.

At the outset, I wish to convey my deep appreciation to the President and the Executive Committee of the Association for successfully promoting and facilitating international businesses in Cyprus, as well as supporting us in the efforts to further cement our country’s position as a modern and competitive business hub.

The current situation in Cyprus is one of renewed opportunity and optimism, with excellent prospects in key growth sectors, such as the banking and financial services, shipping, energy and tourism. 

Cyprus continues to exhibit robust economic growth, with real GDP growth reaching 4,1% in 2018, while in 2019 it is estimated to reach 3,2%.

As regards the outlook of the Cyprus economy in the coming years, we expect a slight deceleration of economic performance, brought by external developments, which however will remain at comfortable levels. Growth is projected at 2,9% and 2,7% in 2020 and 2021 respectively.

The strong economic activity is also reflected in the labour market, with a continuous downward trend in unemployment, which is now less than 7%. 

In terms of public finances, fiscal targets have been achieved with considerable margins, with Cyprus exhibiting one of the highest primary surpluses in the EU.

This is mainly due to prudent budget execution but also to strong performance of revenues.

Despite the recent assistance provided to the banking sector, public debt is on a sustainable path, with debt to GDP declining to 95% in 2019 from around 100% in 2018. Debt levels as a percentage of GDP are projected to continue declining in the following years, on the back of high primary surpluses and strong economic growth.

In the financial sector, the banking institutions have been adequately recapitalised and restructured. The level of Non-Performing Loans, as a percentage of total loans, has been significantly reduced to around 31% from levels of more than 50% some years ago.

In absolute numbers, the improvement is even more evident as the current level of NPLs stands around 10 billion euro, down from around 28 billion euro in 2014.

We acknowledge the fact that the NPLs ratio is still high, but through various tools such as sale of portfolios, the application of ESTIA scheme and the revised insolvency and foreclosure laws, we expect further deterioration of the level of NPLs by the first half of 2020. 

This overall positive economic performance has been acknowledged by the Rating Agencies, with Cyprus now being an investment grade economy, which is also reflected in the significantly reduced sovereign bond yields. 

The aforesaid achievements were not only the result of the prudent fiscal policy we followed, the strengthening of our stable and competitive tax and legal regime, the implementation of measures which facilitated economic and investment opportunities and the adoption of significant structural reforms; it was the combination of the above-mentioned in conjunction with the patience and hard work that the people of Cyprus demonstrated, as well as the co-operative stance of the majority of the political partners, the social partners, and in particular the professional business organisations and the private sector.

To this end, I take this opportunity to reiterate our commitment to:

• Remain focused on maintaining and broadening the conditions under which surpluses and high growth rates can be generated.
• Improving the country’s business environment through adopting measures and implementing new incentives which facilitate economic and investment opportunities.
• Continue implementing the government’s ambitious reforms, which, amongst others, include:

- The reform of the whole judiciary system, with the aim of making the system more effective and speedier, including the establishment of a commercial arbitration court.

- The establishment of a new Independent Supervisory Authority for the Insurance and Provident Funds with the aim of strengthening regulation and supervision.

- The adoption of the new legislative framework for the management of Investment Funds, which opens up new avenues for the services’ sector.

- Implementing a National Strategy for Decentralised Ledger Technology, also known as Blockchain Technology.

- Improving governance in the field of research and innovation. In this regard, our decision to establish a Deputy Ministry dedicated to Innovation and Digital Policy, marks a new era in our efforts to become a dynamic and competitive economy driven by research, scientific excellence, innovation and technological development.

At this moment, please allow me to raise an issue that made the headlines for the wrong reasons recently, and for which I feel obliged to refer to.

Despite some mistakes and omissions during its implementation in the early stages of the Cyprus Investment Programme, it is a fact that since then, the Government has tightened up the procedures and the application process.

Let me be absolutely clear: safeguarding our country’s credibility and reputation remains a top priority. This is the exact reason than an even more strict screening was enacted earlier this year, adopting new measures and strengthening controls.

Seizing this opportunity, I wish to reiterate our firm commitment to strictly adhere to the criteria, terms and conditions that govern the Programme, carrying out enhanced due diligent checks and a careful implementation of its processes.

Furthermore, I also wish to attest that Cypriot financial institutions have been very diligent in advancing their corporate governance policies through applying stricter rules in their attempts to eliminate unlawful actions.

As I have already stated, despite our country’s positive economic outlook and the encouraging forecasts for the years ahead, we remain firmly committed to, not only to maintain but to further reinforce, both Cyprus’ position as a stable and fully transparent business location, as well as our tax and legal framework.

In this demanding endeavour we are grateful to have the trust, the support and the tangible contribution of all the members of the Cyprus International Business Association through their value-added investments.

Placing your confidence in our economy’s potential was instrumental towards the quick recovery of the Cypriot economy and its return to conditions of growth, following the severe economic crisis of 2013.

Today, your continuous support remains vital in ensuring that Cyprus remains on the path of sustainable growth and to overcome the various obstacles and challenges that lie ahead.

Rest assured that my Government will offer all help deemed necessary towards any new entrepreneurial and business initiatives you might identify, as well as new areas for future cooperation.

In closing, ladies and gentlemen, I would like to once more extend my sincere thanks to the President, Ms Doxia Nikia Hadjivassiliou, and the Executive Committee of the Association for their tireless efforts in promoting our country as an attractive investment destination and in supporting international businesses in Cyprus.

Thank you for your attention and I wish you a pleasant evening.

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Note: The Address was read by the Deputy Minister of Tourism Mr. Savvas Perdios

RM/AS/SCH