FinMin says economy is experiencing positive evaluation

The economy is experiencing positive evaluation and this must be maintained and continued, Minister of Finance, Makis Keravnos said, presenting his vision for helping Cypriot industrialists, both small and large, to invest more and collaborate with foreign investors because, as he said, "Cyprus can produce a lot."

In a lecture that he delivered on the evening of 2 November at the University of Cyprus, organised by the School of Economics and Management of the University as part of the 'Annual Lecture of the Minister of Finance,' Keravnos stressed that "it is a fundamental advantage for Cyprus, as a small country, to be able to continue its developmental path," to serve the needs of its people, and "to be able to play an international role within the EU."

However, he said that the deficit in the current account balance is a cause for concern and should be addressed, adding that "we should examine what we produce in Cyprus," while expressing the opinion that "we can produce a lot."

He said that more foreign investments are needed and for this reason he has taken some initial steps. The Finance Minister said Cypriot industrialists and craftsmen, both small and large should be asked what they need to invest more and added that we should "find foreign investors who would want to collaborate with Cypriots and create infrastructure and production units in Cyprus".

He noted that by diversifying the economic model to some extent, we can address the deficit in the current account balance.

Furthermore, Keravnos revealed that the Ministry of Finance and the Government have been looking at the fact that Cyprus' net investment position amounts to 100% of GDP with "greater attention" and "thoughts and proposals are being made to see how we can address this issue."

The Ministry of Finance explained that "this indicator shows that the money leaving Cyprus is much more than what is coming in" and that "our imports are significantly reduced compared to our exports," and he noted that according to the EU, this indicator should be at 35%.

"It is an indicator that not all of us monitor as much as we should, to the extent that we should," he added.

In his lecture, the Minister of Finance addressed, among other things, the key priorities and objectives of the budget for 2024 and the Medium-Term Fiscal Framework (MTFF) 2024 - 2026, as well as the major macroeconomic and fiscal risks.

Furthermore, he emphasised the need for surpluses due to ongoing challenges and noted that from 2025, the repayment of a loan of €6.3 billion borrowed from the European Stability Mechanism during the financial crisis will begin, a payment that will last until 2030.

Regarding green and inclusive development, which is part of European economic policy, Keravnos said that green tax reform involves the gradual imposition of taxes on fuels, water, and sewage, and he added that this month Cyprus should introduce taxes on fuels.

"Do you understand how contradictory this is at a time when fuel prices are rising, and the government is coming with measures to mitigate fuel price hikes, for the government to impose taxes?", he questioned.

He further said that "our effort is to move this issue to the end of the first quarter of 2024, and we are trying to see how we will handle it,"adding that "the impact may be neutral on public finances, but I don't know if it will be neutral for households."

The Minister of Finance referred to this point in a recent meeting with the Finance Ministers of Germany and France, during which he told them that it is difficult for Cyprus to implement green taxation, which aims to encourage people to use public transportation because Cyprus does not have public transportation, which surprised the two Ministers.

He explained that "Cyprus is a small country and has been divided for 50 years, and while we are an EU territory, we are occupied as a result of the invasion of a third country, and this prevents us from planning this issue as well as many other issues."

Cyprus has been divided since 1974 when Turkish troops invaded and occupied the island's northern third.

(Source: CNA)