Business & Economy

FINANCE: Fund Management the way ahead for the Cyprus economy

12 November, 2018

Fund Management is part of a “new era” for the Cypriot economy, as the industry is showing significant growth since the 2013 financial meltdown, Finance Minister Harris Georgiades said.

 “I am delighted to note, that Fund Management, is part of this new beginning for the Cyprus economy,” Georgiades told the 4th International Funds Summit.

He said apart from tourism, shipping, real estate and business services, Cyprus’ productive base is expanding into new sectors such as higher education, innovation, offshore natural gas and renewable energy.

Georgiades highlighted the rise of Cyprus as a new destination for Fund Management as an excellent example of government, industry, and regulators, working together to ensure that all the ingredients of success are in place.

The Cyprus economy during 2009 – 2014 lost 10.5% of its output, while in the four years ending in 2018 the economy will grow by an aggregate 16%.

“We have more than covered the lost ground and, if all goes well, we expect growth to remain above 3% annually for the next three years. These rates make Cyprus one of the fastest growing economies in the EU,” Georgiades said.

He referred to fiscal surpluses, noting that this policy will be maintained in a bid to reduce the island’s high public debt from the current 104% of GDP to 90% of GDP by 2020.

Noting that Cyprus recovered from the financial crisis with no tax hikes, Georgiades said increased spending is not a sustainable option.

“What we are working for, is stable, sustainable, long-term economic growth. In fact, we are staying clear of policies of tax and spend.”

Demetra Kalogirou, Chair of the Securities and Exchange Commission, referred to the rise of the fund management sector in Cyprus over the last five years.

She said that the funds established in Cyprus have risen from 13 in 2013 to 172 in 2018, representing an increase of 69% in the last three years.

Kalogirou said that total assets under management rose to €5.7 bln by September 2018 compared with €3 bln in 2017, marking an increase of 90%.

She also referred to the reforms in the legal framework and the tax breaks that have been implemented, fostering the fund management industry in Cyprus.

“We believe with all these regulatory changes and improvements, along with tax incentives especially designed for fund managers, we create all the necessary preconditions for the healthy growth of the collective investment sector.”

The Cyprus Investment Funds Association (CIFA) President, Angelos Gregoriades referred to the challenges facing the industry from potential disruptions due to technology and regulation.

“A big challenge will be to adapt to the wave of new regulations that is coming our way without losing momentum when it comes to create new products to meet client expectations.”

He said the Cyprus funds industry needs to be proactive and to follow with speed new market trends.