Welcome address by the President of the House of
Representatives
at the 5th Nicosia Economic
Congress
I would like
to thank the organisers, Gold Magazine and the Institute of Certified Public
Accountants of Cyprus, for the opportunity offered to me to be here today and,
in turn to welcome you all to this important event, the fifth Nicosia Economic
Congress .
Today’s Economic Congress takes place at what I consider
a turning point for the Cyprus economy. After the shock suffered by the
unprecedent decision of the Eurogroup back in March 2013, imposing impairment on
bank deposits, fiscal indicators show that the Cyprus economy is stabilising.
However a lot of challenges lie ahead, such as reducing the unemployment rate,
non-performing loans and putting the economy back on to a sustainable growth
track.
After the Cyprus Gross Domestic Product lost more than
10%, in the last three years, the minimal growth recorded during the first
quarter of 2015, for the first time since the second quarter of 2011, is just a
positive sign.
The gradual restoration of confidence in the Cyprus
economy is also evident through the fact that the yields on Cyprus bonds have
reached a five year low, whereas after two years, all capital controls imposed
on Cyprus’ banking system during the financial crisis of 2013, were lifted as of
6 April 2015.
However, taking stock of the situation, there is a lot
to be done - a shift towards growth-generating policies is crucial, in order to
address the high levels of unemployment, that are recorded in Cyprus, especially
youth unemployment. There is a need to at least try to prevent the “loss of a
generation”, by taking concrete measures and adopting policies that do not focus
on austerity, but rather on growth.
This shift is also evident on a European level, through the recent
implementation of the European Central Bank’s policy of quantitative easing, the
implementation of which has started in March 2015 and, potentially following the
positive completion of the current Troika evaluation, Cyprus will be eligible
for participation. This policy is a step in the right direction, although it
should have been initiated earlier, to prevent the prolongation of the recession
in the Union. But, to enhance the efficiency of this policy and restore the
European economy to growth, this should be combined with a plan to strengthen
public and government spending and the application of important growth policies
contained in the Juncker package.
Liquidity needs to be restored in the Cyprus economy,
but, in order to achieve this, the challenge of the non-performing loans needs
to be effectively addressed. The high level of private debt and the need of the
businesses to deleverage make financing of new initiatives and creation of
employment opportunities difficult. That is why it is very important to improve
the business environment in Cyprus, so as to attract investment capital.
The implementation of the foreclosures law and the
insolvency framework shall be closely monitored to avoid social unrest and mass
foreclosures that will also undermine the stability of the financial sector.
Similar are our concerns in relation to forthcoming legislation relating to loan
securitisations and disposals.
There are also
further structural reforms underway in Cyprus, such as the restructuring of the
public and health sectors and privatisations, one of the topics that will be
discussed here today. Restructuring and reorganising such organisations is
necessary in this continuously evolving international business environment.
Private sector involvement will help in this direction, but we need to safeguard
national security and the rights of the employees and to avoid the creation of
private monopolies. That is the reason why, providing just a minority interest
of the share capital of these organisations to the private sector, may be a more
proper solution for Cyprus.
Finally, I hope that the Greek Government and the Institutions will
finally reach an agreement, minimising the current uncertainties. As part of the
European solidarity, the new measures shall give the opportunity to Greece to
put its economy back on to the growth path and to tackle structural and social
issues. The position of Greece is within Eurozone.
I thank you for your attention and I now leave you to enjoy today’s
event and insightful discussions.
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