Confidence in the outlook and future developments in the Cypriot economy, are given by the Credit Rating Agencies, Finance Minister Constantinos Petrides said during his opening speech at the 1st Annual Financial Markets Forum held in Limassol.
Mr. Petrides said, among other things, that all the Rating Agencies agreed that Cyprus' economic performance, including public finances in 2021, but also the resilience it has shown in 2022 to date, was much better than expected and that medium-term conditions continue to support efforts to reduce the country's public debt.
At the same time, he noted, the rating agencies also documented the significant challenges still facing the economy that need to be addressed, particularly NPLs in the banking sector and high levels of public and private debt.
The Finance Minister also said that essentially, the Rating Agencies give a vote of confidence on the prospects and future developments in the Cypriot economy and that they base their opinion not only on the rapid recovery of the economy after the 2011-2013 crisis and the difficult health crisis of 2020, but also on the consequences of the Russia-Ukraine war this year and on their belief that in the medium term there are strong underlying growth drivers and strong prospects for a return to fiscal surpluses.
He added that recovery can be achieved through the rational absorption and use of EU and Recovery and Resilience Fund funds and, in the longer term, through the exploitation of gas reserves.
The Finance Minister also noted that after a significant increase in the debt-to-GDP ratio to 115% in 2020 caused by the pandemic, the gross debt of the general government continued its downward trend, reaching 103% of GDP at the end of 2021.
He noted that as fiscal performance continues to improve along with steady GDP growth, general government debt is expected to fall to around 75% of GDP in 2025.
Mr. Petrides said the government maintains prudent cash reserves equivalent to at least the next nine months' financing needs, reducing any refinancing risk.
He stressed that the Cypriot government has the resources, the tools, the appetite and the conviction to pursue growth by diversifying its production model and investing in high-value sectors such as information technology and green energy. The new production model, he said, is represented by investments and reforms in the recently published Vision 2035 long-term strategy and Cyprus' Resilience and Recovery Plan.
Furthermore, he said that Cyprus has, in recent years, made significant strides in education, research and innovation, showing one of the highest average annual growth rates of research and innovation investments among EU member states.
Noting that innovation needs space to flourish, the Vice President of the European Commission, Mr. He explained that it is centrally located with easy access near higher education institutions, medical/research centres and government services in an urban environment, which is expected to work in synergy with other measures the Government is promoting to develop the innovation ecosystem. The government, he continued, has commissioned a feasibility study and a master plan that will examine the prospect of creating an innovation zone and will soon issue a call for the selection of a strategic investor.
Petrides added that the well-coordinated actions of the state have allowed Cyprus to be upgraded to a strong innovator, according to the recently published results of the European Innovation Scoreboard.
We further aspire to become a regional centre for ICT companies and a gateway for international business in the EU. To this end, we have prepared a Business and Talent Attraction Strategy, which was approved by the Council of Ministers at the end of 2021."
The Minister of Finance noted that the Strategy has been well received, as evidenced by the more than 1200 companies registered with the Business Facilitation Unit and the more than 9000 skilled employees who have recently moved and are working in Cyprus.
However, he added, we are aware of the challenges faced by international businesses and their workforce and said that our efforts are focused on further promoting e-government to provide, among other things, faster and more reliable services to businesses.
In conclusion, Petrides said that the road ahead is complex and has challenges both regionally and internationally, noting that economic growth comes from knowledge and innovation and here CNA
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