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BY GEORGE MOUSKIDES
President, Association for the Promotion of Property Development and Manager, FOX Smart Estate Agency
The measures voted by the House of Representatives, in conjunction with other factors will lead to positive developments in the Cyprus economy during the second half of the year.
Let us examine which are these other factors.
The million dollar question in everybody’s mind is whether developments will lead Greece out of the Euro zone.
If this were to happen then surely this would be catastrophic both for Greece and Cyprus. We believe such a scenario will not materialise.
With Greece solidly in the Euro zone, the two economies have room for improvement.
JUNE A MILESTONE
The election of a new government in Greece this month and the injection of a further 18 billion euros to Greek banks are bound to shift developments on the positive side, the precondition being that the aid is used to trigger market growth.
The recapitalisation of Laiki Bank, by the end of June is also expected to bring about a much needed change of mood in the Cyprus economy.
It is highly possible that private investors will not be lured into the game and the Cypriot government will have to buy the bank’s shares, with guarantees from the European Central Bank.
What is also expected is that the European Central Bank will set some conditions before dishing out the cash. If these conditions do nothing to alter the preferential tax treatment of the Cyprus government toward foreign companies, then any other demands will be positive for the island’s economy.
NEW MEASURES A MUST AND A PLUS
It’s also important to note that the Finance Minister is working full time to devise new measures aiming to put into state coffers or save a further 200-300 million euros to be used for budgetary purposes. These measures will also serve to tighten state finances and boost growth.
The ‘seasonality’ of the Cypriot economy is also a beneficial factor. With the summer holiday season just around the corner, liquidity will get a substantial boost from tourists arriving to enjoy our sunshine and beaches.
We believe that there is indeed light at the end of the tunnel, based on all of the above measures. People and ‘experts’ who pay lip service to catastrophic scenarios achieve nothing more that tear to shreds our already terrible psychology.
Measures of all sorts are always helpful, but most of all we have to be optimistic. And let us never forget the benefits we are to enjoy the next 3-4 years from the natural gas finds. We surely will be able to employ them soon to turn things around for our economy.
