Despite the crisis of the Covid-19 pandemic Cyprus’ economic policies remain the same, targeting macroeconomic and financial stability, prudent fiscal policies, and establishing a competitive, business-friendly regulatory environment of high standards, Minister of Finance Constantinos Petrides said on Thursday.
Addressing the virtual 5th International Investors Summit, organised by the Invest Cyprus, Petrides stressed that the government aims to fully utilising the €1 billion fund allocated to Cyrus by the EU Recovery and Resilience Fund to pursue “a new growth model based on green and digital transition.”
“Despite the pandemic setback, our policy priorities remain the same, that is achieving macroeconomic stability, implementing prudent fiscal policies, ensuring financial stability and establishing a competitive, business-friendly regulatory environment of high standards,” Petrides said.
He stressed that the government’s aims to fully exploit newly established European instruments such as “the “Recovery and Resilience Facility”, providing a mix of grants and loans to member states, is expected to be instrumental in the revamping and the resilience of our economy, including actions related with green and digital economy.
“We believe that the additional funds, up to 1.0 billion euro allocated to Cyprus, will be key for our economy to become more competitive in the global economic stage,” he said noting that Cyprus is in the process of finalising a national Recovery and Resilience Plan following extensive consultation with all involved stakeholders.
“This Plan, will basically constitute the blueprint for our growth policies for the next years, includes a combination of investments and reforms. It takes into account the need to mitigate the economic and social effects of the current economic crisis and the need to strengthen the resilience and the competitiveness of the economy, through a new growth model based on green and digital transition”, he said.
On the economy, Petrides said that following a contraction of around 5.5% in 2020 due to the covid-19 crisis, Cyprus expects to bounce back in 2021 with GDP expansion in the region of 4.5%, while public debt is estimated to rise to 120% due to the increased government spending to shore up the economy, combined with reduced government revenue.
But he stressed that the significant rise in public debt is attributed to high bonds issuances aiming to strengthen the government’s cash reserves which currently amount to 20% of GDP.
On part, Michael Michael, President of Invest Cyprus, said an unprecedented year due to the covid-19 pandemic, “now more than ever before international competition for attracting foreign direct investment has become much more intense as it is the key for economic growth adding direct value both for society and economy.”
But he noted that “Cyprus as one of the EU’s fastest growing economies aims to relentlessly diversify its economy and upgrades its offered services and products, developing sectors that holds significant potential.”
“Cyprus’ economy is characterized by its ability to adjust to changing circumstances and bounce back from external shocks, as it has proven throughout the years,” he went on to say, recalling the IMD’s 2020 World Competitiveness Report naming Cyprus as the most improved country climbing 11 spots to the 30th place of a total of 63 countries.
Michael referred to Invest Cyprus 5-year strategic plan which inter alia, aims to attract FDI from the international tech cluster, placing Cyprus as a regional location for headquartering, attracting FDI in tourism and accommodation via TourInvest.
Great emphasis is placed the international tech cluster, maintaining compelling advantages as a location for regional HQ for multinational companies focusing on high-tech enterprises, he added
During the conference, experts showcased Cyprus advantages and incentives mainly for headquartering of companies from Non-EU member states as well as executives from non-EU member states.