Filenews 8 August 2024 - by Theano Thiopoulou
The economy will suffer if companies of Ukrainian interests leave Cyprus, which came to the island after the Russian invasion, the Fiscal Council points out, and calls on the government not to show complacency, but to develop a comprehensive policy.
In its interim report, the Fiscal Council notes "the complacency observed on the issue, driven by the fact that real estate purchases have been made and schools have been built to serve Ukrainian refugees. However, we believe that these data are not convincing enough to justify complacency."
The Fiscal Council expresses its deep concern to the Government and states that "it is not possible to develop policies and incentives in the absence of a complete picture of the family, demographic, business and other characteristics of the Ukrainian presence in Cyprus after the start of the war.
The Ukrainian presence in Cyprus continues to expand after the Russian invasion, having created multiple benefits for the economy. It is estimated that about 24,000 Ukrainians remain in Cyprus, of which 7,000 have tourist status and are counted in tourism figures. The presence of the Ukrainian factor in Cyprus has, according to indirect but extensive measurements, acted significantly in a number of sectors, including state revenues, real estate and education, but also in the activity (including exports) in the technology services sector.
Fear of mass exodus
The interim report notes concern about the economy and notes that "data concerning travel-visits to Ukraine by Ukrainian citizens, consumer behaviours, combined with the behaviour of VAT revenues, but also the presence of start-ups, justify the assessment that the Ukrainian presence is most likely macroeconomically significant, even without tangible or complete quantification of this presence. At the same time, indications are extensive that a comprehensive and intense Western policy after the end of hostilities will be the development of a "cordon sanitaire" to limit any (real or not) expansionist intentions that may follow on the part of Russia afterwards.
The characteristics of Ukrainians in Cyprus – income, demographics, business and consumer behaviour, as well as views and needs – must be recorded through administrative data, which can support the development of policies to avoid a mass exodus, whereby up to 40-50% of Ukrainians can potentially leave Cyprus within just a few months.
The Fiscal Council calls on the Government not to ignore the management of the next day and the return of companies of Ukrainian interests to Ukraine, combined with the interest of Western companies in the country. "Over the past 10 months, a number of long-range international Western operations have taken a decision and announced an increase in their presence in Ukraine, despite the fact that security issues for personnel remain serious. In addition, other multinationals are gradually announcing their intention to operate or expand operations in Ukraine as soon as conditions allow."
The likelihood of a reversal of inflows to Cyprus should be considered particularly high and, to the extent that Western states' efforts prove successful, the return of Ukrainian and Ukrainian businesses to their country of origin. Such a development will have significant implications for the Cypriot economy, for which preparations should be made in advance, by developing incentives and other policies that encourage Ukrainian interests not to abandon Cyprus but instead to expand towards Ukraine.
The Fiscal Council, in its interim report, notes the fact that "information and publications emanating from technocrats of the European Commission claim that they are in dialogue with Ukraine to review the EU's migration policies after the end of the war, with the aim of "encouraging" the repatriation of Ukrainian refugees to their country. This reaffirms the development of a repatriation policy, both for individuals and businesses."
