The
President of the Republic, Mr Nicos Anastasiades, gave a speech this morning at
the 9th Cyprus Summit of the Economist entitled “Cyprus on the mend?
An open discussion with Government, the Troika and business”. In his opening
speech on “Achieving stability, growth and prosperity”, the President of the
Republic stated the following:
“Ladies and gentlemen,
It is with great pleasure that I address today the 9th Summit
of the Economist in Cyprus.
This year's Summit finds the Republic of Cyprus going through one of the
most critical periods in its modern history. The violent restructuring of the Cyprus banking
sector, as decided by our partners, the continued negative external
environment, the necessary correction of unbalanced public finances, are
factors that adversely affect economic growth.
Within this context since last March we have launched an ambitious
program aimed at restoring economic stability and laying the foundations for a
sustainable economic growth path for the benefit of society.
Undoubtedly,
economic stability is seen as a prerequisite for achieving sustainable economic
growth. This is for a number of
reasons, such as to render the economy resilient to external pressures, to
avoid burdening future generations and to use taxpayers' money for development
expenditure rather than debt repayment or the maintenance of a squandering
state.
Ladies and gentlemen,
For Cyprus in particular, the economic growth enjoyed until recently was
unprecedented, but it was not sustainable. In reality, our economy was
operating beyond its capacity, with unsustainable public finances and an
oversized banking sector exposed to excessive risks.
It is for these reasons that we are now faced with the most difficult
economic crisis in decades. A crisis with incalculable social consequences,
which inevitably deteriorated because of the "special solution"
imposed by our lenders.
But we all need to make self-criticism, since many of our problems are
due to our failure to build a sustainable development model.
Within this framework we have developed a comprehensive development
strategy that aims to restore stability and put the economy back on a course of
growth and progress.
Now,
without delay and negligence, we are taking bold decisions to implement prudent
fiscal policy, we are changing what must be changed and proceeding with large and
bold structural changes. We are turning the crisis into an opportunity, we are
trying at least.
We are
doing what is necessary to restart the economy, reform and modernize the state
and put Cyprus back on a growth course.
Ladies and gentlemen,
Until today we have had two positive evaluations by the Troika, something
which demonstrates our commitment to the precise and timely implementation of
the provisions of the Memorandum, in order to stabilize and restore confidence
in our economy.
Let me also mention that according to the latest data it becomes apparent
that the range of the economic recession will be smaller than expected, at
least for 2013.
I would like to emphasize that it is my personal conviction that only
through the precise implementation of the Memorandum we will be able to restore
the confidence of foreign investors as well as of our fellow citizens in the
Cyprus economy. I acknowledge and it is a fact that most of the measures that
we are obliged to undertake are painful, but unfortunately without the measures
there will be a downturn with a recurrence of phenomena similar to those of
other countries that are on the programme.
At this point I would like to note
the positive feedback recorded by our lenders, namely that “no other country
performed like Cyprus”. If nothing else, this is an indication as well as an encouragement
that if you adhere to fiscal discipline you have the prospect of creating the
conditions for stabilizing and also restoring confidence and hence,
investments, which are very significant.
With
regard to the banking sector in particular, the significant steps achieved have
been acknowledged, such as the full recapitalization of the Hellenic Bank with
a contribution of foreign investors as well and the beginning of the
restructuring of Cooperative Institutions. Furthermore, the Bank of Cyprus is
proceeding with its restructuring plan with a permanent Board of Directors and
a new CEO. These steps contribute to the stabilization and the gradual revival
of the market and the services sector.
The truth
is, however, that some major challenges remain in this sector. This is why
courage and consistency are needed in order to restore, the soonest possible,
full confidence in the banking system. Another issue being discussed concerns
the reduction of bank interest rates, and I hope that through the restructuring
it will become possible to give, the soonest possible, to small and medium
enterprises an opportunity to survive and withstand the challenges and the
burdens they are facing.
At the same time we are making huge efforts in the implementation of
measures to stimulate growth. The Government and I personally have launched a
campaign to attract foreign investments which are expected to contribute
significantly to the liquidity of the Cyprus market. Attracting foreign
investments constitutes a top priority for the Government, given the challenges
faced by our banking sector. Foreign investments are the catalyst for economic
growth, business environment, employment and hence, our country’s prosperity.
We need to pay more emphasis to attracting foreign investments, precisely
because it offers opportunities for immediate action, capable of not only
halting the repercussions of the crisis but also of creating the preconditions
for the resumption of the economy and of course, for growth.
Moreover, tackling unemployment constitutes another one of our main
concerns. Youth employment and the efforts to tackle youth unemployment, were
at the focus of my intervention at the Special Summit of EU leaders on Youth
Employment last June, but also recently in Paris. The issue of youth employment
constitutes a top priority for the Cyprus Government and within this framework
Cyprus will present, at the end of December, a comprehensive action plan in
which the recommendations “Youth Guarantees” will be included.
Allow me at this point to express my contentment with the two financing programmes announced by the President
of the European Investment Bank, Mr Werner Hoyer, recently in Cyprus following the discussions we
held.
Both
programmes are intended for the private sector which we know that has been more
severely affected by the economic crisis. Moreover, we know that the prospects for
new employment posts and recovery will be created primarily by the private
sector. As you are aware there is a moratorium on public sector recruitment.
This is the reason why we reiterate the declared intention of the Government to
make the most of every financing instrument offered by the European Investment
Bank. In this way we will provide financing sources to the sectors facing the
greatest difficulties.
I also
remind you of the recent proposal of the European Commission for a grant of
€200 million as urgent aid to Cyprus, due to the association of our country’s
economy to a Memorandum, in the framework of the Programme 2014-2020.
I consider
equally important the fact that during the last European Council the Government
succeeded in increasing the co-financing of projects from 60% to 95%, with a
reexamination in 2016 and a possible extension for more years. With this
development, new prospects are opened up for the acceleration of the
implementation of development projects that will push the economy forward with
the creation of new employment positions.
Further to
what I have said, I would like to make a reference to the economic development
in connection to our efforts for a solution to the Cyprus problem. As you all
realize a final settlement of the Cyprus problem will create conditions of
stability and expand the prospects so that a reunited Cyprus - a full EU member
state, with complete implementation of its obligations, but also with all the
rights granted to it – creates the prospects for a collaboration between the
two communities, their businesspeople, the wider society, to create co-creation
prospects through peaceful coexistence, but also through a modern European
state. I would like to assure you about our determination to work with the same
consistency that we are working for the recovery of the economy, with the hope
that the other side will soon show the same goodwill and that after an agreement on the
basic principles which should govern the solution, we will be able to enter
into a substantive dialogue that will lead us, as soon as possible, to a solution
of the longstanding problem that has caused only pain and problems for the citizens
of this country.
Ladies and gentlemen,
Based on the above, it is easy to draw the conclusion that the answer to
the question of the Summit as to whether the economy of Cyprus is on a positive
restructuring course, is positive. Undoubtedly, the economic environment will still
be difficult. This is something that should be acknowledged. Miracles do not
happen from one day to the next, particularly considering the cumulative
problems we have in front of us. The Government, however, will continue to
monitor regularly and closely the developments and we will intensify our
efforts to achieve growth, in order for our country’s economy to recover the
soonest possible.”
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