Keravnos: Our goal is a fully digitalised state offering quality services

Finance Minister Makis Keravnos said the government's goal is to create a fully digitalised state offering quality services, addressing a gathering over the weekend.

The summit, entitled "The future of Business: Adapting to a Changing Landscape", was organised by CIM, the Cyprus Business School at the Bank of Cyprus headquarters in Nicosia.

Speaking about the digital transition, the Finance Minister noted that ''our goal is to create a fully digitalised state that offers quality services to citizens, as well as to businesses'', indicating that this will also facilitate the development of new knowledge intensive sectors, enabling the diversification of the economy into new growth enhancing sectors.

Elsewhere, Keravnos pointed out that the global economy is experiencing a period of extraordinary uncertainty following the pandemic and the wars in Ukraine and the Middle East. ''These geopolitical developments weigh on the economic outlook and on inflation developments, creating a very challenging economic environment,'' he added.

''In the case of Cyprus, the Cyprus economy has exhibited strong economic performance, better than the euro area average. More specifically, economic growth for 2023 reached 2.5% and inflation dropped sharply in 2023, at 3.5% compared to 8,4% in 2022,'' he said.

''At the same time, Cyprus has also been fiscally prudent and able to create the necessary fiscal space, with public debt on a continuously declining trend,'' the Finance Minister said, noting that ''Cyprus’ fiscal performance and reform efforts have been acknowledged by the rating agencies, exhibited by the fact that Cyprus is now rated as an investment grade country by all agencies''.

''Recovering the investment grade rating is only a first step. We acknowledge the fact that maintaining this positive momentum requires continued action over the coming years,'' he went on to say.

''As regards the prospects of the Cyprus economy, they are generally positive but surrounded by significant uncertainty, especially as regards geopolitical developments. For 2024 we project economic growth of around 2.9%, with inflation dropping further to around 2.5%,'' Keravnos added.

''The focus of our economic policies at least in the short term, is to alleviate, to the extent possible, the negative impact of these developments on our citizens,'' the Finance Minister said, pointing out that ''we have already taken a series of measures, targeting the most vulnerable groups and stand ready to adopt further measures if needed''.

At the same time, he indicated the need ''to strike a balance between the needs of our society today, while ensuring the wellbeing of our economy for generations to come''. To achieve this, as he said, ''our policy priorities remain focused on achieving macroeconomic stability, implementing prudent fiscal policies, ensuring financial stability and establishing a competitive, business-friendly regularity environment''.

Speaking about the Government’s 5-year Plan, Keravnos said that it includes a diverse mix of structural reforms and investments which aim at enhancing the long-term growth potential of the country. He added that the strategy fully exploits the Recovery and Resilience Facility of the EU through which €1 billion was allocated to Cyprus and is fully aligned with the Long-Term Growth Strategy for Cyprus, or “Vision 2035”.

''Our Plan includes actions that will lead to the diversification of the growth model of the economy, through the development of new knowledge-intensive sectors, but also the strengthening of traditionally important sectors for the Cyprus economy,'' he went on to say, pointing out that important horizontal reforms include the modernisation of the public sector, which aims at enhancing the productivity and efficiency of public services as a key enabler of growth.

He further added that ''we will implement a comprehensive tax reform, aiming at modernising the taxation framework, with the main pillars being the increase of the competitiveness of the Cyprus tax model, the reduction of the administrative burden for taxpayers and businesses, while providing a fairer redistribution of the tax burden''.

As regards the green transition, Keravnos pointed out that the main objective is to meet the EU's ambitious targets through the implementation of the necessary measures including among others a number of schemes to expedite the adoption of Renewable Energy Resources, actions to promote the cyclical economy, as well as the implementation of the green taxation reform.

Moreover, the Finance Minister spoke about the Strategy for attracting businesses, noting that it ''is currently being implemented with noteworthy success''. He said that the Strategy includes a series of actions and reforms, such that the establishment of a Business Facilitation Unit, introduction of a digital nomad visa and revised policy for the issuance of Temporary Residence and Employment Permits to third country nationals employed in companies of foreign interests operating in Cyprus.

''The prospects of the Cyprus economy are generally positive but there is significant uncertainty in the horizon. In this context, it is important to remain vigilant, constantly monitoring and evaluating the situation. Our Government stands ready to adopt any necessary measures when and where it is warranted,'' he concluded.