Address by the President of the Republic, Mr Nikos Christodoulides, at the Conference of PWC - Cyprus
Lemesos, 15 September 2023
It is with great pleasure that I join you for the annual conference of PWC Cyprus, for the first time as President of the Republic. Having taken part in the PWC conference in my previous capacity, when I was Minister of Foreign Affairs, I know first-hand that this is an event that never fails to inspire with its uncompromising professionalism and insightful discussions. I would firstly like to express my special thanks to Philippos and the whole PWC family for the invitation, and for the opportunity to interact with all of you and share my vision for Cyprus, through this high-level platform.
We live in an era marked by continuous challenges, both at the global and national level. Challenges that demand our collective attention and action. From the multifaceted impact of the Russian invasion in Ukraine, to the imperative need to propel forward with the green and digital transitions, we are called upon to provide effective solutions that bolster the resilience and competitiveness of our economy, as well as safeguard the fabric of our society.
In addressing these complexities and shaping the future we want, the cooperation between the Government and the private sector is imperative. This cooperation must be anchored on a common vision, and that is to make Cyprus a great place to live, a great place to work and do business. It is only through strong cooperation that we can create synergies, leveraging the expertise and resources of the private sector, bringing in innovative ideas, technology, and industry-specific knowledge that governments admittedly usually lack and I can say that being in Office for six months now. This collaboration can lead to more effective, more efficient policies, tailored to the dynamic needs of today’s world; it also promotes transparency and, ultimately, enhances good governance.
In this vein, PWC Cyprus has consistently and effectively contributed to government efforts for policy formulation, strategic orientation and the pursuit of reforms. An exemplar case of this contribution was the formulation of the long-term economic strategy of the Government, namely Vision 2035, that was assigned to PWC by the Economy and Competitiveness Council, funded by the European Commission as one of its flagship reform projects for Cyprus.
Vision 2035 constitutes a collective, remarkable achievement that we should all take pride in. The strategy is not yet another initiative; it marks a transformative shift in our approach, paving the way for a new growth model based on tangible medium- and long-term objectives. It is a process of where we want to go, where we want to be in 2035, and one that runs across electoral cycles.
The anthropocentric model of our Governance Programme fully integrates Vision 2035. Our commitment to its implementation is unequivocal, with many actions already being financed through Cyprus’ Recovery and Resilience Fund with a timeframe up to 2026.
The global economy finds itself in a state of turmoil. Inflationary pressures are squeezing household budgets and eroding their purchasing power. High interest rates add further strain, making borrowing more expensive while hampering economic growth. Moreover, geopolitical tensions are casting a shadow of uncertainty over international trade and cooperation, impacting global supply chains and investment.
Navigating this complex landscape requires strategic orientation, robust public finances and smart policy decisions. In this respect, our Government adheres to a three-pillar approach that will subsequently increase our competitiveness: fiscal discipline through government budget surpluses, a stable and healthy banking sector and continuous structural reforms.
According to our macroeconomic scenario, the prospects of the Cypriot economy remain positive in the medium term, despite the significant degree of uncertainty. The growth rate for 2024 is projected to be around 2.9%. While this represents a weaker growth compared with previous years - in line with the weaker growth momentum of the EU – it is well above the EU average, which is projected to stand at 1.4%. For the years 2025 and 2026, GDP growth at around 3% is expected.
Moreover, inflation is continuing its downward trend, expected at 2.5% for 2024, and at 2.0% for the years 2025 and 2026, whilst unemployment rate is expected at 5.8% in 2024, and to decrease to 5.0% by 2026. Over the medium term, the fiscal position is projected to remain in surplus, resulting to the further reduction of public debt to around 60% in 2026.
At the end of this month, we will be submitting our first national budget to the House of Representatives. A budget with a healthy fiscal surplus, reflecting our commitment to fiscal discipline and sound public finances, including a number of reform and actions derived straight from our Governance Programme.
This first budget will mark the beginning of the unfolding of our government’s strategic orientation for the 5-year term, based on a set of ambitious but realistic priorities that will guide our actions by 2028.
The first such priority is the swift and effective resolution of chronic issues that concern citizens, most importantly migration, affordable housing, road congestion.
Secondly, a strong and resilient economy. In this respect, as already announced we will reform the country’s current tax system, so as to ensure that our economy will strengthen its competitiveness. This restructuring is being currently devised in conjunction with external advisors, who have already been appointed, as well as the substantial contribution of all stakeholders, including PWC.
Thirdly, our Government aims to effectively resolve the long-standing issue of mordernizing our state. Inter alia, this includes fighting corruption and the perseverance of meritocracy. In this regard, one of my first acts as President, was to deal with the aftermath of the US and UK sanctions by immediately sending a clear message of zero tolerance. Moreover, the Government took immediate action, by deciding five specific measures. These include the preparation of a study, which will provide recommendations for the enhancement of the governance and supervision of administrative services providers. Within this framework, the establishment of a Single Supervisory Authority for these services will be examined and promoted.
In addition, in order to increase the impact and effectiveness of our policies, as well as to ensure that our interventions are timely and targeted, we have established a Secretariat for the coordination and support of the Government Programme, under the responsibility of the Deputy Minister to the President. We follow the good practices of other EU states.
The fourth priority is green transition, fully compliant with our European obligations. The overarching aim of this initiative is to ensure that all households will have access to low cost clean energy.
In line with what was previously communicated by our government, we will do our outmost to lay the foundations for a better tomorrow. At the center of this is our focus on education and health. The existing educational system must be reformed, so as to equip current and future students with skills which will be applicable and in high demand in the near future. Equally importantly, we will safeguard the health system.
I want to also refer to the plethora of additional initiatives that are undertaken, which specifically aim at enhancing the attractiveness of Cyprus as an investment destination. Our aspiration is to create an attractive business environment that promotes transparency, efficiency, and which diversifies our economy. In this regard, we are diligently working towards the implementation and gradual revamping of the existing Strategy for Attracting Investment and Talent, which was launched successfully by the previous government in 2022.
In the same trajectory, the government is exclusively aiming to undertake specific actions for the branding of Cyprus, which is indispensable to enhancing our country's appeal to investors and professionals, as it can significantly influence perceptions and decisions, and create a compelling narrative that resonates with international audiences. This will also safeguard the reputation of Cyprus as a credible center for financial and professional services. Understanding that a strong and positive reputation is a valuable asset, as it instills confidence and trust among investors, both domestic and international, we are working on a comprehensive and coherent brand for Cyprus, showcasing Cyprus as a reliable, forward-thinking, and attractive destination for diverse opportunities and experiences. In this respect earlier this week, two days ago, I had a very inspirational meeting with Blair Sheppard and we have agreed to work together to create a new narrative for Cyprus. This narrative needs to be agreed by all stakeholders and communicated with a strong voice through all channels both in Cyprus and abroad.
At the cornerstone of all that we do is of course our efforts for a reunified, prosperous Cyprus through a viable comprehensive settlement of the Cyprus question, in line with the agreed UN framework, UN Security Council resolutions and EU law. I adamantly believe that the current status quo cannot be the future of Cyprus and I have, since day one of my election, prioritized the need to break the current stalemate in the negotiations. I believe we have a window of opportunity to achieve this, that the EU has a key role to play in this regard, and we are working very closely with our EU partners, with the US and other key players in this direction. Tomorrow I will be travelling to New York for the High Level Week of the UN General Assembly, and we are working so that developments in New York pave the way to resumption of negotiations.
Crucial to the success of our initiatives and strategies is also our extrovert foreign policy. A prime example is the extensive network of partnerships and cooperation networks in our immediate neighbourhood, as showcased by last week’s trilateral summit between Cyprus Greece and Israel, where we have agreed that we will invite our Indian counterpart in our next meeting. Work is also underway for an official visit to India, expected in 2024.
In concluding, as we strive to establish the conditions for a resilient and thriving economy, always guided by the long-term vision 2035 and a commitment to actively support investors and professionals in our country, I am filled with optimism and confidence. We fundamentally aim, as articulated in Vision 2035, to “transform Cyprus to be one of the world's best countries to live, work and do business in”.
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