Upgrades are important, we are on a steady upward course – Cyprus Finance Minister

Upgrades are important, we are on a steady upward course – Cyprus Finance Minister

Republic of Cyprus Finance Minister Haris Georgiades, speaking on Cyprus Public Television this morning, commented the course of Cyprus economy, making references to the economic assessments, emphasizing the need to consolidate Cyprus’s competitiveness, to the efforts made by the Government and the private sector for this purpose, but also to the areas where the country needs improvements so that the investment interest could be strengthened.

More specifically, the minister stated, “the upgrades are important, we are on a steady upward course. What is confirmed by the day before yesterday’s upgrade is that we are now on the right track. It is through these assessments that the signal is being send to the international investment community on the state and prospects of an economy. It is not only the state that is thus facilitated to finance its needs; indeed, we are already borrowing at the lowest interest rates that the Republic of Cyprus has ever secured, but the positive prospect of private foreign investment is also important.

[…] If we have another upgrade from a particular House, SSNP, we also typically achieve the investment grade. And if one studies the assessment more carefully, one can easily diagnose that we are on the right path. I would appreciate that over the next twelve months this will happen as well.

In the positives are foreign and local private investment, good performance in other sectors of the economy, such as shipping, also the resilience and adaptability of the vital sector of services that finds new products and markets. Nevertheless – and this is the message I repeat at every opportunity – that we are on the right track, results on the one hand by the assessments as well, and on the other, every fellow citizen understands that we have managed to deal with the dangers and be on a recovery path. But we must continue and understand that: if an economy wants to remain productive and competitive the reform effort and the effort to attract investment must be continuous; we can not rest. I am not completely satisfied, but I think we have done so much. This is illustrated by measurable EC evaluations in the field of reforms that rank Cyprus among the top three”.

The Minister added that “we are constantly on foot, and we make – both the Government and the private sector – travels and contacts internationally, both in London and the Gulf countries, and in the US.

The message we receive is that Cyprus is an attractive investment destination with an attractive business environment and significant advantages. These are told to us by foreign investors. This, of course, does not mean that we can not improve. We can limit bureaucracy. Steps were taken in the Department of Registrar of Companies, in the Department of Taxation. We know what our weaknesses are. For example, the justice sector has been left behind. Not in terms of independence or impartiality, but in terms of efficiency and speed in the administration of justice. A country international investment center, a service provider, must pay attention to this. That is why a major reform and investment is taking turn, drawing on external technical support, and also earmarking funds for e-justice and for setting up a new, specialized trading court. Where (sector) we are lagging behind, the determination for improvement is given”.

Georgiades also added that “the refutation of those who criticized the government’s economic policy is complete. Where is the austerity? Those who denounced this policy as an austerity policy were those who were accustomed to spending money that they had not. They spent 1 billion a year on money we did not have. This practice is not followed by this Government and we can be judged by the results.

This policy of prudent public finance management and avoidance of the creation of deficits, balancing the state budget, does not mean you have no room to do social policy – either this is called Minimum Guaranteed Income, or a shorter term of office in National Guard and recruitment of professionals, or major infrastructure projects that started in 2015 and to which new ones are constantly being added, or significant tax reliefs, such as the extraordinary wage taxation”.

Invited to comment on the large number of stores available for rent in Paphos, the Finance Minister replied: “Of course, we have not yet covered all the lost ground for all the shops to be rented. The bubble created much more than our economy needed. We have never said that we have traveled the distance. From 2009 to 2014, when the recession lasted, we lost 11% of the GDP. Over 2.5 years we have covered more than half. The remnants of that deep recession are still being experienced. However, the signs of recovery are just as obvious.

To a question about the management of future gas revenues, Haris Georgiadis outlined the Government’s intentions on the issue, noting that “the government bill for the management of future gas revenues has been tabled in the House for more than one year.

I would call on the House in September to vote on this legislation, so that there is an out-of-the-box response, both clear and transparent, both internally and abroad. I do not think there is a problem. Not only because it is, of course, also related to our national problem, but also because it has its economic significance if a state has in time established a transparent and credible management framework for a future significant revenue stream.

[The bill] provides for the establishment of a National Fund. It predicts that a part will initially be able to head towards debt reduction as well.

What has caused this unnecessary and counter-productive confrontation with 5/6 and 1/6 concerns an old convergence on a small fraction of the federal revenue, with the clarification that most of the revenue would not even be federal, but would have belonged to the states. The vast majority of these federal revenues would still be returned to the states and a small fraction of them would remain, and there is a reference of a 6%, which with this ratio of 5/6 would go for investment in the Turkish Cypriot state until the simulation of living standards. I would like to make it clear that this is not even an agreement.

The President of the Republic is prepared to discuss an integrated framework that will including such aspects of the financial management. It is a convergence, but not an agreement and in any case has nothing to do with gas, with VAT perhaps yes. And this comes to shows how barren the public debate is sometimes in this place”./IBNA