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Limassol,
15 September 2023
It is
with great pleasure that I join you for the annual conference of
PWC Cyprus, for the first time as President of the Republic.
Having taken part in the PWC conference in my previous capacity, when I
was Minister of Foreign Affairs, I know first-hand that this is an event that
never fails to inspire with its uncompromising professionalism and insightful
discussions. I would firstly like to express my special thanks to
Philippos and the whole PWC family for the invitation, and for the
opportunity to interact with all of you and share my vision for Cyprus,
through this high-level platform.
We live
in an era marked by continuous challenges, both at the global and national
level. Challenges that demand our collective attention and action. From the
multifaceted impact of the Russian invasion in Ukraine, to the imperative
need to propel forward with the green and digital transitions, we are
called upon to provide effective solutions that bolster the resilience
and competitiveness of our economy, as well as safeguard the fabric of
our society.
In
addressing these complexities and shaping the future we want, the cooperation
between the Government and the private sector is imperative. This
cooperation must be anchored on a common vision, and that is to
make Cyprus a great place to live, a great place to work and do
business. It is only through strong cooperation that we can
create synergies, leveraging the expertise and resources of the private
sector, bringing in innovative ideas, technology, and industry-specific
knowledge that governments admittedly usually lack and I can say
that being in Office for six months now. This collaboration can lead to more
effective, more efficient policies, tailored to the dynamic needs
of today’s world; it also promotes transparency and ultimately, enhances good
governance.
In this
vein, PWC Cyprus has consistently and effectively contributed
to government efforts for policy formulation, strategic orientation
and the pursuit of reforms. An exemplar case of this contribution, was
the formulation of the long-term economic strategy of the
Government, namely Vision 2035, that was assigned to PWC by the Economy and
Competitiveness Council, funded by the European Commission as one of its
flagship reform projects for Cyprus.
Vision
2035 constitutes a collective, remarkable achievement that we
should all take pride in. The strategy is not yet another
initiative; it marks a transformative shift in our approach, paving
the way for a new growth model based on tangible medium- and long-term
objectives. It is a process of where we want to go, where we want to be in
2035, and one that runs across electoral cycles.
The
anthropocentric model of our Governance Programme fully integrates Vision
2035. Our commitment to its implementation is unequivocal, with many actions
already being financed through Cyprus’ Recovery and Resilience Fund with a
timeframe up to 2026.
The
global economy finds itself in a state of turmoil. Inflationary pressures are
squeezing household budgets and eroding their purchasing power. High interest
rates add further strain, making borrowing more
expensive while hampering economic growth. Moreover, geopolitical
tensions are casting a shadow of uncertainty over international trade and
cooperation, impacting global supply chains and investment.
Navigating
this complex landscape requires strategic orientation, robust public finances
and smart policy decisions. In this respect, our Government adheres to a
three-pillar approach that will subsequently increase our competitiveness:
fiscal discipline through government budget surpluses, a stable and healthy
banking sector and continuous structural reforms.
According
to our macroeconomic scenario, the prospects of the Cypriot economy remain
positive in the medium term, despite the significant degree of uncertainty.
The growth rate for 2024 is projected to be around 2.9%. While this
represents a weaker growth compared with previous years - in line
with the weaker growth momentum of the EU – it is well above the EU
average, which is projected to stand at 1.4%. For the years 2025 and 2026,
GDP growth at around 3% is expected.
Moreover,
inflation is continuing its downward trend, expected at 2.5% for 2024, and at
2.0% for the years 2025 and 2026, whilst unemployment rate is expected at
5.8% in 2024, and to decrease to 5.0% by 2026. Over the medium term, the
fiscal position is projected to remain in surplus, resulting to the further
reduction of public debt to around 60% in 2026.
At the
end of this month, we will be submitting our first national budget to
the House of Representatives. A budget with a healthy fiscal surplus,
reflecting our commitment to fiscal discipline and sound public finances,
including a number of reform and actions derived straight from our Governance
Programme.
This
first budget will mark the beginning of the unfolding of our government’s
strategic orientation for the 5-year term, based on a set of ambitious
but realistic priorities that will guide our actions by 2028.
The
first such priority, is the swift and effective resolution of chronic
issues that concern citizens, most importantly migration, affordable
housing, road congestion.
Secondly,
a strong and resilient economy. In this respect, as already announced we
will transform the country’s current tax system, so as to ensure that our
economy will strengthen its competitiveness. This restructuring is being
currently devised in conjunction with external advisors, who have already
been appointed, as well as the substantial contribution of all stakeholders,
including PWC.
Thirdly,
our Government aims to effectively resolve the long-standing issue
of mordernizing our state. Inter
alia, this includes fighting corruption and the
perseverance of meritocracy. In this regard, one of my first
acts as President, was to deal with the aftermath of the US
and UK sanctions by immediately sending a clear message
of zero tolerance. Moreover, the Government took
immediate action, by deciding five specific measures. These include
the preparation of a study, which will provide recommendations for the
enhancement of the governance and supervision of administrative services
providers. Within this framework, the establishment of a Single Supervisory
Authority for these services will be examined and promoted.
In
addition, in order to increase the impact and effectiveness of our policies,
as well as to ensure that our interventions are timely and targeted, we have
established a Secretariat for the coordination and support of the Government
Programme, under the responsibility of the Deputy Minister to the
President. We follow the good practices of other EU states.
The
fourth priority is green transition, fully compliant with our
European obligations. The overarching aim of this initiative is to ensure
that all households will have access to low cost clean energy.
In line
with what was previously communicated by our government, we will do our
outmost to lay the foundations for a better tomorrow. At the center of this
is our focus on education and health. The existing educational system
must be reformed, so as to equip current and future students with skills
which will be applicable and in high demand in the near future. Equally
importantly, we will safeguard the health system.
I want
to also refer to the plethora of additional initiatives that
are undertaken, which specifically aim at enhancing the
attractiveness of Cyprus as an investment destination.
Our aspiration is to create an attractive
business environment that promotes transparency, efficiency, and which
diversifies our economy. In this regard, we are diligently working
towards the implementation and gradual revamping of the existing Strategy for
Attracting Investment and Talent, which was launched successfully by the previous
government in 2022.
In the
same trajectory, the government is exclusively aiming to undertake specific
actions for the branding of Cyprus, which is indispensable to enhancing our
country's appeal to investors and professionals, as it can significantly
influence perceptions and decisions, and create a compelling narrative that
resonates with international audiences. This will also safeguard the
reputation of Cyprus as a credible center for financial and professional
services. Understanding that a strong and positive reputation is a
valuable asset, as it instills confidence and trust among investors, both
domestic and international, we are working on a comprehensive and coherent
brand for Cyprus, showcasing Cyprus as a reliable, forward-thinking, and
attractive destination for diverse opportunities and experiences. In this
respect earlier this week, two days ago, I had a very inspirational meeting
with Blair Sheppard and we have agreed to work together to create
a new narrative for Cyprus. This narrative needs to be agreed by
all stakeholders and communicated with a strong voice through all channels
both in Cyprus and abroad.
At
the cornerstone of all that we do is of course our efforts for a
reunified, prosperous Cyprus through a viable comprehensive settlement of the
Cyprus question, in line with the agreed UN framework, UN Security Council
resolutions and EU law. I adamantly believe that the current status quo
cannot be the future of Cyprus and I have, since day one of my election,
prioritized the need to break the current stalemate in the negotiations. I
believe we have a window of opportunity to achieve this, that the EU has a
key role to play in this regard, and we are working very closely with our EU
partners, with the US and other key players in this direction. Tomorrow
I will be travelling to New York for the High Level Week of the UN
General Assembly, and we are working so that developments in New York pave
the way to resumption of negotiations.
Crucial
to the success of our initiatives and strategies is also our extrovert
foreign policy. A prime example is the extensive network of partnerships and
cooperation networks in our immediate neighbourhood, as showcased by last
week’s trilateral summit between Cyprus Greece and Israel, where we have
agreed that we will invite our Indian counterpart in our next
meeting. Work is also underway for an official visit to India, expected
in 2024.
In
conclusding, as we strive to establish the conditions for a resilient and
thriving economy, always guided by the long-term vision 2035 and a commitment
to actively support investors and professionals in our country, I am filled
with optimism and confidence. We fundamentally aim, as articulated in Vision
2035, to “transform Cyprus to be one of the world's best countries to live,
work and do business in”.
RM/SCH
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