How the Government is intensifying its efforts to further improve Cyprus' investment climate

The Cyprus economy has demonstrated remarkable resilience and competitiveness, as evidenced by its consistent growth.

Currently, we are witnessing a decline in inflation, bringing it closer to our target rate of 2%, while unemployment is approaching the level indicative of full employment. Projections suggest that Cyprus is well-positioned to sustain this favourable trajectory through the coming years, with an expected growth rate of more than 3%, significantly exceeding the average growth rates observed in the EU.

This positive performance demonstrates the Government’s unwavering commitment to sound governance and the implementation of effective economic policies. These policies encompass prudent fiscal management, strong support for local businesses, incentives designed to foster growth and the creation of a competitive economy that appeals to investors across diverse industries. As a testament to these efforts, Cyprus is gaining increasing recognition on the international stage and has received multiple upgrades from esteemed international Credit Rating Agencies.

Notably, Cyprus has regained its ‘A’ investment grade from Moody’s, Fitch, and S&P Global. These upgrades significantly boost confidence in the Cyprus economy, reassuring investors that the country is managing its finances effectively, while minimizing risks. They also signal stability, showcasing our resilient financial systems and our ability to navigate global challenges, thereby fostering a predictable environment that supports long-term growth. The Agencies note, in particular, the robustness of the banking sector, which has strengthened its capital base and liquidity, and also Cyprus’ debt profile, which is projected to fall below the Maastricht Treaty’s 60% threshold by 2026.

A major factor contributing to the country’s economic success has been the considerable influx of Foreign Direct Investment, which is largely driven by the pro-investment environment and the overall investment package that Cyprus offers. Invest Cyprus – the Government’s principal organisation dedicated to positioning Cyprus as an attractive destination for investment and business – and the Business Facilitation Unit of the Ministry of Energy, Commerce and Industry have greatly assisted in attracting foreign investment.

In fact, our ongoing strategic collaboration with Invest Cyprus and its President and with various Ministries has been paramount in creating an attractive business environment and putting the right incentives in place to make Cyprus a premier investment destination.

What is particularly noteworthy is the distribution of investment across various industries in Cyprus, which underscores the country’s successful economic diversification. This achievement is critical, as it illustrates the resilience of the economy by mitigating dependence on a single sector. Significant advancements have been observed in key sectors, such as information and communication technology, financial services, manufacturing, shipping, education, energy and tourism. These sectors have experienced considerable growth, fostering innovation, generating employment and positioning Cyprus as a dynamic hub within the EU and the broader region.

Going forward, the Government will persist in implementing its ambitious strategy to enhance the financial resilience and competitive standing of Cyprus, in alignment with “Vision 2035”. This strategy encompasses the promotion of the digital transformation and a green transition, alongside a strong commitment to modernising the tax system to enhance the competitiveness of the economy. We will also strive to implement structural reforms aimed at enhancing efficiency and fostering sustainable economic growth, innovation and long-term prosperity.

To conclude, even though Cyprus already offers a compelling package for attracting foreign investment, our Government will intensify and continue its efforts to further improve the investment climate, to the benefit of investors and local society alike.

This article first appeared in the January edition of GOLD magazine. Click here to view it.