Cyprus' economy is on its way to recovery, Deputy Secretary to the President Constantinos Petrides has said, noting however that the recovery will be gradual and the main benefits of the reforms will only be felt over the next years.
In his speech at the 4th Nicosia Economic Congress entitled “The State of Cyprus Economy-
One year after the Euro Group Decision”, Petrides stressed that “we have been able to withstand the shock. Both politically, and economically. We are on the way to recovery”.
“We have come a long way in addressing the imbalances of the banking system which has already been recapitalized, and is also at an advanced stage of restructuring. Capital controls are gradually being relaxed”, he added.
As he said, “our main challenge now is to raise additional capital from private sources and to secure foreign participation in our banking sector. That would decisively re-establish confidence. The prospect, unthinkable a few months ago, looks very promising today”.
In terms of public finances, Petrides said “our efforts have been equally determined. We have drastically cut public expenditure and our fiscal performance is already much better than expected. We have created fiscal buffers, beyond the targets set by Troika”.
He noted that “taking control of public spending enables us to send a clear message to investors and the markets. Our proven policy orientation is not to correct fiscal imbalances by raising taxes”, adding however that “yes we have a long way to go. But for the first time during the last few years there is a sense of direction”.
Over the next two years, he added “the government intends to implement wide-ranging structural reforms; A civil service reform, health care system reform, welfare reform, tax administration reform as well as an ambitious privatization program”.
As regards the productive sectors of the economy, he continued, “key sectors such as the tourist industry, the shipping industry, and the business services industry are demonstrating a stronger than expected resilience”.
“We are encouraging the emergence of new sectors of economic activity, such as the energy sector – hydrocabons and renewable energy – and the careful and well planned emergence of a gaming industry”, he said.
At the same time, he added, “we are moving according to plan with the privatization of the SGO’s, and we hope to have the first results by the spring of 2016”.
Petrides said that “the situation is far from perfect. And there is no quick fix solution. We suffer from high unemployment, 17%, and it will take time until it drops again to a single digit”.
“The recovery will be gradual, and the main benefits of the reforms will only be felt over the next years, probably the term of another government”, he concluded.
