Cypriot economist and Nobel-Prize Winner Christoforos Pissarides has stressed that new investments are needed to revive the economy and achieve economic recovery and growth.
In an interview with CNA, Pissarides underlined the need to attract large foreign investments and investment funds or Hedge Funds, while he welcomed the interest expressed by Russian and Chinese companies to invest in Cyprus.
With regard to measures needed to bring the Cypriot economy back on track, Pissarides said that new investments are necessary to achieve economic recovery and growth.
The financial crisis limited the liquidity of local companies and commercial banks therefore the way out is to attract huge foreign investments and in this aspect, we should feel very lucky for natural gas deposits have been found in Block 12 in Cyprus' Exclusive Economic Zone, Pissarides pointed out.
He said that huge publicity was given to the issue abroad and as a result ''many companies want to come to invest in Cyprus, while ''we are offered the opportunity to attract investment funds or Hedge Funds».
He noted that the economy could be revived by investments of the type of the ones already announce, such as the Russian investments and the Chinese investment at the site of the old Larnaca airport.
On the natural gas issue, Pissarides suggests the establishment of an independent gas company, with shareholders appointing its Board of Directors.
He stressed that natural gas supply to Cypriot companies should be based on market prices and not on friendly prices, noting that the purchase price in Cyprus will certainly be lower than the market price abroad because it will not include the cost of transporting the gas abroad.
He also underlined the need for tackling bureaucracy in order to attract foreign investment and suggested that retail shops expand their working hours and open at weekend in an effort to help the economy to recover.
Referring to the constant trade deficit registered in Cyprus, Pissarides expressed the opinion that the way out is to facilitate enterprises providing services and tourism and suggested to turn Cyprus into a country of services exports and the income to be used to finance the purchase of industrial products.
He also said that the only industry, which Cyprus could develop, is agricultural products, such as wine, a sector already advancing and also suggested the establishment of small pharmaceutical and electronics companies.
Invited to comment on the possibility Cypriot banks to need state support, the Nobel-Prize Winner stressed that in such case support should not be given by issuing common shares giving the state voting rights but with not-voting shares. He also expressed the opinion that in such a case banks should turn to the European Support Fund to borrow the necessary funds with a state guarantee.
Asked about the extension of the retirement age to the 64th year and the ongoing discussion following a proposal certain parliamentarian parties have tabled, Pissarides clearly stated that he favours this measure. Nevertheless, he estimated that could negatively affect unemployment rate therefore, he recommends the postponement of the implementation of the measure for a year or two. He also suggests the extension of the retirement age to the 65 year for both the public and private sector no later than 2014, to the 67 with the 70 year as the limit.
Pissarides was clear that the extension of the retirement age should be accompanied by incentives such as the reduction of the employees’ contributions to the Social Security Fund or the increase of their pensions.
Finally, the Nobel-Prize Winner commented on the action taken by the EU to face the debt crisis. He expressed the opinion that the EU adopted austerity measures with delay he appeared however optimistic that in 2-3 years the tough austerity measures will yield fruits and the situation will be better. Pissarides expressed support to a strong ESM to avoid a repetition of the discussions regarding Greece and to strengthen the trust of the markets.
