The first signs of recovery are emerging in Cyprus, and the country's president, Nicos Anastasiades, is confident that the measures and resolutions put in place by the government will see the economy return to growth by 2015.

It is a fact that after the Eurogroup's [the finance ministers of the eurozone's] decision to impose a levy on uninsured deposits in Cyprus, a considerable disruption of the functioning of the country's economy occurred. Moreover, the negative external environment and the necessary fiscal adjustment are, unavoidably, having an adverse impact on economic activity in Cyprus.

My government’s priority is to address these challenges as thoroughly, as effectively and as promptly as possible. At the same time, my government is fully committed and determined to strictly implement the memorandum of understanding it agreed upon in November 2013 with the troika of the European Commission, the International Monetary Fund and the European Central Bank.

With regards to the banking sector, through its restructuring and the implementation of a comprehensive action plan it is emerging stronger, well capitalised and viable, restoring depositor confidence and enhancing its ability to continue contributing to economic growth. 

The Bank of Cyprus has exited from the resolution status and has acquired a core Tier 1 capital ratio of approximately 12%, well above the threshold of 9%. There is also now a new and permanent board of directors, which, among other things, will implement a restructuring plan for the bank. Hellenic Bank has also been fully recapitalised without the use of public funds. In addition, numerous restrictions on transactions and capital movements have been lifted – including on international businesses activities – and our aim is for conditions to permit all restrictions on financial transactions to be abolished as soon as possible. 

On the turn

Crucially, trust is returning to the banking system, as evidenced by the slowdown in overall deposit outflows and the recorded increases in deposits by EU residents in September 2013, as well as by third-country nationals during October. 

Concerning fiscal consolidation measures, from the evidence so far it appears that the Cypriot economy contracted less in 2013 than was forecast by rating agencies and other organisations. Moreover, fiscal indicators are performing better than expected. However, the government is fully aware of the significant risks ahead. Another difficult year is expected in 2014 but in 2015 we expect the economy to start growing again, if only at a moderate rate. 

Ratings agency Standard & Poor’s upgraded the Cypriot economy in November 2013, after three years of successive downgrades, and the forecast for a return to growth by 2015 is supported by the troika’s own predictions. 

With reference to other measures being adopted, in order to alleviate the problem of unemployment, the government has announced a number of measures, such as the provision of national grants and incentives for flexible employment terms, as well as offering opportunities of employment for the unemployed in the tourism industry. 

Moreover, the government is currently taking specific actions in order to benefit from capital guaranteed by the European Investment Fund. More specifically, the board of the European Investment Fund recently approved €150m under the Trade Finance Facility, which will re-activate credit lines with international banks and support short-term, trade-related instruments. The board also approved a loan of €150m for the establishment of an entrepreneurship scheme for the financing of small and medium-sized enterprises. 

Still attractive

Another priority of utmost importance is the reform of public administration and tackling governmental bureaucracy, which also includes changing the country's approach towards foreign investors, including both those that are interested in setting up a business in Cyprus and those already operating in the country.

At the heart of the government's strategy for economic recovery is foreign direct investment and, to this end, all steps are being taken to facilitate a more effective and business-friendly environment. In November 2013, 1000 new companies were registered in Cyprus, reinforcing the expectations of stakeholders in the international services sector that the situation is improving.

This fact came as no surprise to people in the industry, since the country retains its many competitive advantages. With almost 50 double tax treaties in effect, a highly qualified and professional workforce – the majority of which received their education and training in the UK – a fully EU harmonised tax and legal system, and one of the lowest and most competitive corporate tax rates in Europe at 12.5%, Cyprus remains a great investment destination and a highly competitive centre for international businesses.

At the same time, the discovery of natural gas reserves within the country's exclusive economic zone creates tremendous prospects for investments and co-operation in the energy sector and auxiliary services, and has created a new impetus in encouraging opportunities for co-operation between Cypriot and foreign businesses. 

Promising opportunities for growth also exist across many other sectors, including shipping – a sector in which Cyprus enjoys a great tradition and has the 11th largest merchant fleet worldwide and the third largest fleet in the EU – tourism, large-scale development projects, education, health, research and, of course, renewable energy.  

The task of returning to growth is not an easy one, but we are convinced that with the right measures and the co-operation of a more business-friendly state, we will succeed and we will pave the way for greater growth.

Nicos Anastasiades is the president of Cyprus.

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