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Eurogroup President praises “impressive recovery”

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Ireland’s Eurogroup President Paschal Donohoe praised Cyprus’ “impressive recovery” from the coronavirus outbreak, saying it was down to good national policies coupled with EU decisions.

In his first visit since the pandemic, Donohoe met Minister of Finance Constantinos Petrides, who stated that by early 2022 Cyprus could recover most if not all of the ground lost during the pandemic.

In a joint press conference, Donohe and Petrides highlighted the importance of Ireland and Cyprus’ membership of the EU and the euro area.

“The performance of the Cypriot economy its recovery is so impressive, it has been led by a combination of the right national economic decisions and the right decisions at a European level.

“I believe the mixture of these decisions will allow the people of Cyprus to continue to recover from the effects of this disease,” Donohoe.

According to European Commission projections, Cyprus is set to post a growth rate of just over 4% this year and just below 4% in 2022.

“That is a really strong economic performance in the context of how difficult this disease has been, and it is a particularly strong performance given how Cyprus, like many other countries in Europe, places great value on tourism for employment and also for economic growth.”

The Irish Finance Minister also praised the expertise reflected in the Cyprus Recovery and Resilience Plan that will be discussed in the ECOFIN meeting next Monday.

He said the Cypriot plan “has already been warmly received by members of the EU and is already seen to be a really strong plan that will help Cyprus recover from this terrible, terrible disease.”

Donohoe encouraged reforms and changes as the EU is set to “begin the journey back to sensible economic decisions and to lower levels of borrowing”.

“We are all borrowing to support our economies at the moment because we have to because we need to, and we all will at the right point begin the journey as to how we reduce our borrowing and to go back to more normal economic policies.”

Petrides said that following a downturn of 5.1% in 2020, which was the lowest recession among other EU members with sizeable tourism sectors, the EU Commission projects 4.3% growth for 2021.

“So, we believe that by the beginning of 2022, we would have covered most, if not all, of the lost ground due to the pandemic.”

Corporate tax

Petrides underlined the importance of the reforms made before the Covid-19 outbreak that allowed Cyprus to be a constructive member of the Eurozone and borrow from the markets on favourable terms to tackle the crisis while maintaining positive credit ratings.

Asked about Ireland’s position on the proposal for a 15% minimum corporate tax rate, Donohoe said, “we do want to see an agreement at OECD level, and we want to see an agreement because we do believe that an agreement if reached, can bring stability”.

“I also want to see an agreement that is capable of recognizing small and medium-sized economies as well, and it is for that reason that the discussions on global minimum effective tax rate are sensitive and difficult.”

“Ireland is going to continue to be part of the negotiations, and I hope that we can be part of the agreement in the future because I do accept that if there is going to be an agreement, it will create challenges to some countries, including Ireland but I think those challenges and those costs are worth bearing if we can get an agreement on really sensitive issues such as global tax policy.”

Ireland expressed reservations in joining the OECD deal on a global corporate tax rate.