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It is with great pleasure that I am attending the Annual General Meeting of the Cyprus Association of Certified Public Accountants (ACCA), which for years has been carrying out a very important work. A work, which is expressed through the multifaceted activity developed by your Association, successfully representing an important professional sector.
Let me begin by referring to the state of the Cypriot economy. Despite the multiple and diverse challenges facing the global economy, we have managed, through responsible and rational policies and approaches, to make Cyprus' economy - and we are proud of this - one of the leading economies in the European Union in terms of economic performance. This, to refer to something very recent, is also confirmed by the upgrades of the Cypriot economy by two major international rating agencies that we have had in the last two weeks.
Our country experienced the fastest acceleration in the Eurozone and in the European Union as a whole, with a growth rate of 3.5% in the first quarter of 2024, when the average growth rate in the European Union was only 0.4%.
For the years 2024 and 2025, growth is projected to strengthen compared to 2023, unemployment is projected to remain on a downward trajectory, while inflation will continue to slow down. At the same time, a significant reduction in public debt is being achieved, with the aim of bringing it to below 60% of GDP by 2026.
The figures I have just mentioned prove beyond any doubt that our economy is on the right track and we will continue this responsible policy without populism and wishful thinking, but without ever resting on our laurels, taking into account the volatile geopolitical environment and the need to have a strong economy, which will allow us to develop a targeted social policy. This is a priority for our government. In this context, fiscal responsibility, financial stability and continued structural reforms are the triptych that determines our economic policy and any decisions taken in the Council of Ministers. It is what has secured us the important successive upgrades from the international rating agencies, which I am sure you understand their importance, but also the results of our current exit to the international markets.
Today the Republic of Cyprus has issued a €1 billion seven-year bond in the international markets, with an interest rate of 3.25% and a yield of 3.31%.
The strong interest from international and domestic investors translated, in a very short time, into an offer book of €9.6 billion and allowed for a quick completion of the process with positive results for the Republic.
Today's issue and results demonstrate the confidence of international investors in the resilience and momentum of the Cypriot economy and come as a complement to the similar view of international rating agencies that in the last two weeks have upgraded the Republic of Cyprus.
With this successful issue, which was executed in a challenging international environment, characterized by high volatility and international political turbulence affecting capital markets, the Republic of Cyprus In this context and beyond, we as a Government approach you as partners in the great effort to realize our vision of a more resilient, more competitive economy.
Our vision includes, among other things, the modernization of our tax system - a firm position of yours, since the last transformation took place in 2002 - having as its main pillars the increase of our country's competitiveness, the reduction of the administrative burden for taxpayers and businesses and, at the same time, the provision of a fairer redistribution of the tax burden, with emphasis on the middle class of our country, which over time has been the backbone of the Cypriot economy and society. At the same time, we aim to align our tax policies with the objectives of the European Green Deal in the context of the green tax reform being promoted, aiming also to address the huge challenges of climate change, the consequences of which we are experiencing on a daily basis.
The green tax reform, therefore, will undoubtedly also contribute to the achievement of our country's climate goals. At the same time, it will help address some of the distortions in the economy by changing habits in the polluting sectors of transport, energy and water, while effectively promoting the circular economy. It will also boost innovation and green investment in energy, environmental protection and waste reduction. Our roadmap to the green transition is very concrete and we must all contribute to its implementation. I repeat, the impact on all of us from climate change - some people think it is a long way off, which is a completely wrong approach - is here. We have to admit it, unfortunately we are late. Think about the issues in the news today. Air conditioning in schools, fires, immigration. All of these are directly related to climate change. Think about the impact on our tourism with the temperatures in Cyprus, how it will affect tourism. Think about the pressure on the health care system because of all the factors I mentioned. So, the impact is here, we have to move clearly faster. We have been late in realising the challenges of climate change and because I am well aware - I respect all views - some people talk about the high costs of the green transition, what I invite you to think about is that whatever short-term costs we bear will be significantly lower than the costs that we will be asked to bear as a state or as businesses, as households, as a society in general, if we do not act collectively immediately.
Another major objective that we have set from the beginning of our governance is to preserve the name of Cyprus as a credible business and financial centre. From the very first moment, we have always worked in cooperation with the supervisory bodies, but also with the technical support of international reputable authorities, to safeguard the name of our country. We must all approach this issue with absolute seriousness and with specific actions, such as the establishment of the Single Supervisory Mechanism for administrative service providers, to reverse a prevailing perception of our country. And I want to take this opportunity to thank you for your contribution to this effort, in particular to the effort to establish a Single Supervisory Mechanism.
We must see this great challenge as an opportunity to eliminate any shadow for business activities in our country. It was precisely in this context that we dared - we were criticised, I know, not publicly, but in discussions - to ask for the assistance of the American authorities, because we must put an end to all these cases, especially [THOSE] that have seen the light of day and have created a problem in our country.
This is the clear intention of the Government and I am confident that together we can achieve the best for the country, open up new business opportunities and establish a competitive and resilient economic model.
And allow me here to refer to yesterday's agreement with the United States on the establishment of a strategic dialogue between the two countries, which strengthens the name of our country at the international level, the status of the Republic of Cyprus, and offers us a solid foundation for establishing the interests of the Republic of Cyprus in security, defence, energy, research, but especially in the economy, where there are huge opportunities. Specifically, the agreement provides for dialogue on cooperation in trade, investment and development, areas we all understand the importance of, in order to have a more resilient, more competitive economy in the country.
At the same time, in the same general context, we are proceeding with the implementation of our announcements on the rebranding of Cyprus, where we are attempting to present our country as an ideal business and investment destination, based on real data and not on communication tactics. Just last month, the relevant tender was announced for the provision of the necessary consulting services and very soon we will invite you to contribute and participate in this great effort.
The fundamental objective of the Government is to ensure macroeconomic stability and the rational management of resources and financial obligations of the public sector, which will lead to the enhancement of the competitiveness of businesses and the improvement of the standard of living of every citizen of the Republic of Cyprus. We are facing challenges such as digitalisation, the emergence of new technologies, climate change, the demographic crisis and the ageing of the population, with all the consequences also in the sectors of the economy. Particularly in relation to the rapid digital transition, which is crucial to our country's competitiveness, we need to ensure that both the state and Cypriot businesses adapt successfully to this new reality. And it is precisely in this context that we are promoting, in practice and not in words, the digital citizen. Digital Citizen is just one of the Government's initiatives, expected to be operational from September 2024, and will be used as a new tool for citizen interaction with the state. An application through which official documents such as driving licences, biometric ID cards and vehicle registration documents will be digitised and stored in digital format. This is slowly being followed by all documents served by the Government. We are not allowed in 2024 to go to the Civil Service and be asked for a copy of a document issued by them.
I would like to assure you that as a Government we are here to listen to you constantly, to work closely together and to identify effective solutions to the common challenges facing our country.
I look forward to your cooperation and I am confident that you will stand by us in this great effort for a Cyprus that is changing, contributing in a constructive way, as always, as always, to the effort to modernize our country.
(PM/AF/EP)
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