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Next Previous M.Pelekanos: Vigilant to mitigate the impact HOME • INSIDER • ECONOMY • M.Pelekanos: Vigilant to mitigate the impact
Interview with Socrates Joachim/Photos: Dimitris Vattis
“The government has proven in previous crises that it intervenes with targeted measures by providing solutions”
The sign of the two terms of the Anastasiadis government is clearly positive, he claims in I nsider o Government Spokesman Marios Pelekanos. Talk about the effects on the Cypriot economy after the Russian invasion of Ukraine, refers to the tax reform, the corporate tax increase and the problem faced by thousands of companies in relation to finding human resources. He also spoke about the stalemate in the Cyprus issue and its political future.
In a year there will be a change of leadership in the Presidency of the Republic of Cyprus. & Nbsp; In your opinion, will you deliver an economy built on solid foundations?
First of all let me point out that it is too early to report as the government still has a whole year ahead of it, dozens of programs and a very ambitious budget to implement. Let me be quite optimistic that even more will be done in this final straight. Most are already on track or in the final stages of implementation, such as, for example, the new investment plan, the new housing policy, local government reform, justice reform and the civil service reform. & nbsp;
In any case, I consider & nbsp; that, undoubtedly, the sign of the two terms of the Anastasiadis government is clearly positive.
To have a clear picture of the progress that has been made, it is enough to recall the pictures from March 2013 when the economy was on the brink of disaster, the recession reached 7%, unemployment exceeded 16%, cash was only enough for one month of state payments. All the international rating agencies had classified our country in the rubbish category, so we could not & nbsp; borrow if we did not mortgage the country itself, while those who lent to us did so at interest rates that made the costs unbearable for the taxpayers. If these are compared with the current results, anyone can easily understand the magnitude of the achievement we have achieved as Cyprus and of which every citizen should be proud.
Today it is taken for granted that the economy will follow an upward trend & nbsp; and the country will progress. But this is not the case at all. It took solid governance, unpopular decision-making and persistence in a program, so that today we can have a resilient economy that can not only stand on its own two feet but also record high growth rates and excellent prospects.
Just think that for the past 2 years we have been managing a huge pandemic that has as an inevitable consequence serious economic consequences, unprecedented for the whole world. Nevertheless, our country has recorded in 2021 a growth rate of almost 6%, an increase of more than 10% in the average monthly wage compared to 2008, the lowest unemployment rates since 2009 and the largest number of job vacancies also since 2009.
At the same time, significant steps are being taken in terms of strengthening the welfare state.
At the same time, the rating agencies, which are known to be both independent and rigorous judges, ranking our country in the investment grade with their ratings, which allows us to borrow at the lowest interest rates since the payment of democracy, confirm our positive outlook./p>
This does not mean that we are complacent. We have important challenges ahead of us. We focus on these. The full utilization of the amount allocated to us by the European Union Recovery and Sustainability Fund is one of the top objectives. The “Cyprus_of_Tomorrow” Plan. will allow us to use a total of more than € 4 billion, while at the same time we will strengthen the competitiveness of our economy, we will create thousands of quality jobs especially for our young people, we will lay a solid foundation for the transition to a green economy and As I mentioned above, important reforms that the country needs will be implemented.
ONLY NUMBERS DO NOT BENEFIT >Do you answer to all those who accuse the government that the numbers are prosperous and not the citizens?
This is a very dangerous approach. Provides the alibi for politicians and figures to ignore & nbsp; the realities and & nbsp; indulge in populist approaches that in turn lead to & nbsp; undermining the credibility of the state and failing to serve its citizens effectively. We have experienced this in the past with dramatic consequences for citizens and especially the most vulnerable.
Numbers & nbsp; are the most reliable way of describing reality, if of course they are read correctly and not with distorting lenses. And you can easily look at the independent statistics and compare the fluctuation of key economic indicators from 2008 until today as one can easily compare the performance of Cyprus in relation to other EU countries.
A country with high growth rates can only have the conditions for prosperity. A country with low unemployment rates will definitely have lower percentages of citizens at risk of impoverishment.
As self-evident as some things are today, it takes a lot of effort, in the long run, & nbsp; prudent financial management and targeted policies to achieve.
That is why, when we talk about social policy, we mean & nbsp; something much wider than benefits, which of course will always be necessary for some of our fellow citizens, but good social policy should focus on reducing it to the smallest possible the number of our fellow citizens who will need the allowances to meet their basic needs.
Let me remind you that under the current government, the protection net has been strengthened. To briefly mention the introduction of a minimum pension, the new housing policy, the implementation of the EU, the readiness of the state to implement a national minimum wage and the introduction of the GESY, which is the largest reform since the establishment of democracy. >
No state will ever have inexhaustible financial resources. It is important that the state's capabilities are channeled into the economy and citizens in a way that ensures social cohesion, while at the same time the country will take steady steps forward creating the best conditions for the well-being of its citizens today and tomorrow.
The Minister of Finance recently expressed the intention of the Government to proceed with a series of tax reforms, which will take place in 2022. We would like you to clarify when these reforms will be announced and whether the effect they will have on public finances has been costed. ; & nbsp;
This is an issue that is high on the Government's agenda and the announcements should be expected in the near future. The intention of the Government to proceed with tax reform is given, as many things have changed since the last time the Republic has done something similar.
One of the main goals of the reform is a fairer tax system, with emphasis on strengthening the competitiveness of our economy and in connection with our goals regarding the green and digital transition of the country.
The government has repeatedly shown that it studies in detail before taking any further steps. And in this case, of course, all the data will be evaluated, in order to draw safe conclusions, while it is a given that the Government will listen and consult with all the social partners in advance.
Our minimum obligation is to deliver an economy with present and future. & nbsp; & nbsp;
FOREIGN INVESTMENTS AND INCREASE IN CORPORATE TAX of corporate tax at 15% will not negatively affect & nbsp; the effort to attract foreign investment?
First of all, it should be noted that the increase comes through a marathon of global consultations with the participation of more than 150 countries. & nbsp;
Beyond that, I estimate that & nbsp; the relatively small increase in corporate tax from the current 12.5% to 15% will not substantially affect our efforts to attract foreign investment.
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We see this development, not as a threat, but as a new opportunity. Cyprus has many comparative advantages that we should focus on so that not only does not have a negative impact, but instead seize this opportunity to achieve even better results.
We should focus on these and I should say that the reaction of the government was immediate in this case as well, as a new attractive package for the arrival of foreign companies has already been announced. If we want to deal with any impact, we must target sustainable and long-term investments, which, in addition to financial benefits, will help to upgrade the capabilities and skills of our human resources.
At the same time, a difference will be considered. Compensatory measures, such as relief from other taxes or fees, so that the total tax cost & nbsp; of businesses remains at roughly the current level. At the same time, other policies that are being promoted, such as the digital transition, will contribute additionally, as they will reduce the cost of administrative burden. & nbsp;
LACK OF HUMAN RESOURCES
Many companies, mainly in the tourism, construction and catering sectors, are complaining about the lack of human resources. What steps are you taking to resolve this issue? Shouldn't asylum seekers who are currently supported only by benefits be used?
It is this question that proves the steady and upward course of our economy, in the midst of an unprecedented epidemiological crisis that has challenged the resilience of economies much stronger than ours. What your & nbsp; question implies is that our problem today is not unemployment but staff shortages.
The relevant ministry has already come a long way in examining ways in which we could tackle the shortage of human resources, and some tangible results have already begun to appear. In addition, the competent technical committees of the Ministry of Labor are currently examining the requests of the employers of the hotel industry sector and will follow similar procedures for the other sectors of the economy. & nbsp;
In any case, we must continue the same tactics that are followed. That is to say, to categorize the job vacancies, in order to pair the vacancies with the registered unemployed, Cypriots and Europeans, who could pay them. In the event that vacancies remain, alternatives should certainly be considered to meet the needs. be employed. Therefore, no bonuses are granted in these cases.
INFLATION PRESSURES
Inflationary pressures on the Cypriot economy have continued in recent months. Are you considering any new measures to alleviate households and businesses?
Inflationary pressures have been recorded in recent months worldwide for very specific reasons, which are related to the economic effects of the pandemic. The price increases result from the sharp increase in consumption, the increase in raw material prices, which are also affected by geopolitical developments, but also from the distortions observed in the supply chain.
As Cyprus ,, comparatively with other European countries or more broadly, we have kept inflation at controlled levels. However, we already have before us a new negative development with the unpleasant things that are happening in Ukraine, after the invasion of Russia.
We are closely following the developments and we are planning the next moves, both locally and in working with our European partners to reduce the impact as far as possible.
In Cyprus, targeted measures have been taken with a clear emphasis on vulnerable households, while the Government has repeatedly expressed its willingness to take additional measures to alleviate the problem. With the same logic and seriousness we will continue to move, always within the capabilities of the state, and always taking into account that we must pass on to the next generations a sustainable economic model that will be based on the welfare state.
HOUSING POLICY
You have also been the President of the Cyprus Land Development Organization and we would like you to comment on the housing policy pursued by the government and whether you consider it possible for this policy to keep property prices in areas where prices are galloping.
The policies implemented are not solely aimed at restraining prices. The most important thing is that they aim to give solutions and the opportunity to acquire a home owner to those who for various reasons are unable to do so without the contribution of the state. At the same time, other policies are being promoted such as, for example, the fight against urban sprawl and the revitalization of rural, remote, mountainous and remote areas or the reduction of housing maintenance costs while promoting environmental protection through the project ” I save and I upgrade ”.
This is a holistic approach, which covers the whole of Cyprus geographically and makes the vast majority of the population eligible, while new solutions have been offered or are being offered that target our most vulnerable fellow citizens, through, for example, the opening of the affordable rental market that promotes the KOAG or the Home and Home Plans, which provide solutions to our fellow citizens who faced financial difficulties in servicing their loan obligations, due to the effects of the mismanagement that led us to the financial crisis of 2013.
As you know, the total budget for the implementation of the housing policy amounts to 125 million euros for 2022, an amount double compared to the expenditures for 2018 and increased by 22.4% compared to 2021.
I will refer again to the current situation, as this is happening at a time when we are going through the biggest epidemiological crisis since the beginning of democracy. In fact, the amount I have mentioned does not & nbsp; non-cash benefits such as free plots of land for young couples are taken into account. & nbsp;
< b> THE END OF THE CYPRUS
The impasse in the Cyprus issue, what impact does it have on the Cypriot economy and society?
The first and biggest problem caused by the occupation is the undermining of the citizens' sense of security, the which you know is the cornerstone of development in a country.
In recent years, our accession to the EU has strengthened this feeling, but we continue to be a country with more than 1/3 of their territory under occupation for more than 47 years.
As far as the economy and society in particular are concerned, the continuation of the occupation does not allow the utilization of the potential of our country to their full extent. Our ports, tourism with the hundreds of kilometers of beaches from Apostolos Andreas to Akamas, the land, the primary factor of the economy and so on.
And of course, I do not overlook the feeling of injustice caused by the loss of property imposed by the occupation, a reality which despite the enormous efforts made by the state since 1974 is still a wound in Cypriot society.
Therefore, resolving the Cyprus problem is a priority. The President of the Republic did not stop working in this direction, taking initiatives and submitting suggestions, in order to break the deadlock. There have been periods of stagnation in the Cyprus issue from time to time, but never due to the intransigence of our side. The effort will not stop until the reunification of our country, a fact that will create great economic prospects for the benefit of all citizens.
ECONOMIC IMPLICATIONS FROM RUSSIAN INVASION
< p> What economic consequences do you estimate that will have from the Russian invasion of Ukraine?
Russia's invasion of Ukraine is changing the data and it is expected that in the short and medium term, the consequences will be for our economies. Already, before the developments in Ukraine, we were in the middle of a period of inflationary pressures, which arise due to the & nbsp; effects of the pandemic. Now to this is added a new, complex and multidimensional crisis.
Product prices are expected to be affected to a greater or lesser extent due to, inter alia, rising prices for energy and raw materials. At the same time, there are concerns about the impact on tourism and services. To these we must add the consequences of possible new sanctions imposed by the EU and other states, which will need to be monitored.
The data in any case require vigilance, both at local and European level, in order to mitigate the expected impact. The Government has proved in previous crises that it intervenes with targeted measures by providing solutions. There are, in addition, the tools that the Member States of the European Union can use, through the collective decisions required. & nbsp; A set of measures that should take into account, as a matter of priority, the principles of social justice and the need to safeguard economic stability. & nbsp;
Are you afraid of the withdrawal of Russian companies from Cyprus after the clear support of the government to Ukraine?
As I have said many times publicly, we should evaluate the data with sobriety. The glass is not always half empty or & nbsp; half full. What is needed is to make a proper assessment of the real data that will allow us to make the right choice of risk mitigation measures, but at the same time an assessment of the new opportunities that may arise, in order to be able to take advantage, in the good sense , any margins that may be created. & nbsp;
THE POLITICAL FUTURE
How do you envision your political future after the end of the government's term?
In politics, one cannot make long-term plans, for many reasons. The deeds of each one, either as a professional or as a politician, are there for each of our fellow citizens to judge. Politics is something I have always been interested in and will continue to be interested in. So, with that in mind, I answer by saying that at the moment I remain committed to my duties and to the challenges we as a Government face.
In addition, always within the framework of my institutional position, I feel deep the need as an executive of DISY, to continue the planning for the next day of our homeland. The Cyprus of Tomorrow. Pressing on the solid foundation of the achievements of the term of President Anastasiadis, we can safely take the necessary step for the place to the future. Something that I am convinced that the Democratic Alarm and the candidacy of Averof Neophytou guarantee.
