Cyprus can weather economic challenges

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Finance Minister Constantinos Petrides believes Cyprus can tackle the new risks and challenges stemming from the war in Ukraine and soaring inflationary pressures.

He was addressing the 8th International Funds Summit and Expo.

The summit in Nicosia attracts more than 500 delegates from all over the world to discuss the latest trends and developments.

Petrides said: “We are going through a fast-changing and uncertain future, where we must be acutely aware of the risks and challenges, as well as the opportunities.

“I believe that we will rise again to the challenges.”

He noted despite the backdrop of the war in Ukraine; the Cypriot economy has proven resilient and flexible, exceeding the growth expectations significantly.

Petrides pointed out that the Funds industry “is essential in the provision of alternative tools for the financing of long–term projects, businesses, and start-ups and the local economy of each member state.”

“As EU economies still rely largely on the banking sector to provide funding for businesses, market–based finance is a valuable alternative to bank financing, and can facilitate risk sharing across the financial system and support economic activity.”

To provide innovative Cypriot SMEs with access to finance, the government established the Cyprus Equity Fund in collaboration with the European Investment Fund (EIF), contributing €30 mln with significant private capital participation.

He said the fund’s investment strategy would focus on Cypriot start-ups and innovative companies.

Andreas Yiasemides, President of the Cyprus Investment Funds Association (CIFA), said, “we are moving from crisis to crisis, but the Cypriot investment funds sector has proven resilient to the crisis”.

Yiasemides said the funds industry, like all sectors, is again adapting its business model and modus operandi to the new market conditions.

“Last year, we discussed the speed and strength of the post-pandemic economic recovery; this year, we are surrounded by uncertainty, inflation and instability.

“In other words, we are moving from crisis to crisis.

“Despite the difficulties, 2022 evolved into another exciting year for the Fund industry in Cyprus, which is now considered an established sector of the economy, having proved its resilience during COVID-19 and more recently with the consequences of the war in Ukraine, energy crisis and inflationary pressures.

“Cyprus is continuously gaining momentum as a centre of excellence for the international fund and asset management industry”.

He highlighted the Cyprus investment funds sector’s “remarkable growth”, noting that in the first half of 2022, the total assets under management exceeded €11 bln.

Yiasemides also cited the European Funds and Asset Management Association (EFAMA) data, according to which, during 2021, the net assets of AIFs increased by 61.5%.

“Considering that only Ireland, Luxembourg, and Malta concentrate higher percentages, we believe it is a remarkable achievement for a jurisdiction that started developing the sector less than ten years ago”.

George Theocharides, chair of the Cyprus Securities and Exchange Commission, said CySEC had modernised the investment funds legal framework, “contributing to the consolidation of the collective investments sector, which has quadrupled in size since 2016”.