The Cypriot economy will run at a rate of between 3.5% and 4.5% in 2021, depending on the evolution of the pandemic, said Finance Minister Konstantinos Petridis, stressing that vaccination programs have become the “economic tool” for crisis management but and prospects for recovery.
At the same time, speaking at an online conference organized by EBE Nicosia and the European Investment Bank (EIB) entitled “Investment and Investment Finance in Cyprus”, the Governor of the Central Bank Herodotus Herodotus stressed that the pandemic crisis provides an opportunity to align citizens with objectives and in particular addressing vulnerabilities that have been exacerbated by the crisis.
In addition, the conference presented the findings of the EIB investment survey showing that corporate investment in Cyprus fell by 36% in the second quarter of 2020 compared to pre-pandemic levels, while more than 51% of Cypriot companies said that the pandemic affected their investment planning compared to 40% of the European average.
Vaccines tool
In his greeting, Konstantinos Petridis stressed that “it is the first time in modern history that the management and development of the economy depends so much on the success of the vaccination program. “Vaccinations have become the main economic tool for managing the crisis and the prospects for recovery.”
However, Mr. Petridis was optimistic about the course of the economy, saying that “in 2021 we expect a strong recovery between 3.5% and 4.5% of GDP, depending on the evolution of the pandemic and the great uncertainty that still prevails.”
He acknowledged that the pandemic had led many companies to delay their investments but not to complete them altogether, stressing that there were major projects under way, such as the Casino Resort, Ayia Napa and Larnaca Marinas and other mountain projects. areas that will diversify and enrich the Cypriot tourism product.
“There may have been some delays due to the pandemic, but I am optimistic that the implementation of all these projects will give an extra boost to the economy and in fact (these projects) have not been included in our current forecasts,” he said.
Mr Petridis also said that the EU Recovery and Sustainability Facility grants, amounting to around € 1 billion for Cyprus, would be the “plan for the coming years” and the key to becoming the Cypriot economy more resilient.
The majority of these funds have been made through the green transition and the digital transformation, he concluded.
Herodotus: Opportunity for change and dealing with vulnerabilities
In his own greeting, Konstantinos Herodotou said that despite the encouraging signs surrounding the supply of coronavirus vaccines, 2021 continues to present significant uncertainty.
“At the same time, the crisis gives us the opportunity to review and review our economy, promoting better conditions, a greener and more sustainable economy,” he said.
He emphasized the importance of EIB financing, as he said that companies in Cyprus may face restrictions on access to finance, as the banking system, still burdened by high levels of NPLs, avoids taking risks due to the possibility of more NPLs. due to the pandemic.
Mr. Herodotou also stressed that the risk of changing the institutional framework for divestitures and the slow-moving judicial system indicate a relatively high cost in resolving NPLs.
“The current model of development has vulnerabilities, which were highlighted by the pandemic crisis, and these vulnerabilities pose a great danger to the Cypriot economy if they are not addressed,” said the Governor of the CBC.
Mr. Herodotus referred in particular to tourism, the problems of the reputation of Cyprus, the geopolitical challenges and the uncertainty around the legal framework of the sales.
“These vulnerabilities could be exacerbated if we do not accelerate the adoption of advanced and highly digital and green policies,” he said.
EIB Vice President Liliana Pavlova said that the Cypriot economy is expected to recover at a rate of 3.2% in 2021 with acceleration in the second half, as the problem of vaccinations is accelerated by growth being driven mainly by domestic consumption due to the continuation of government measures. support and within 2021.
CCCI: State Guarantees for acceleration of lending
In a discussion that followed, the President of the CCCI, Christodoulos Agastiniotis, referred to the findings of the EIB survey, according to which 44% of Cypriot companies participating in the survey were planning to increase their investments but the pandemic overturned their plans and described as disappointing the finding that only 18% of Cypriot companies plan to increase their investments while, on the contrary, 37% will reduce them.
“Priorities have changed, as now the main concern of companies is how to deal with liquidity problems and ensure their survival. “That is why the Chamber is pushing hard for the granting of loans with state guarantees,” he said.
Mr. Agastiniotis said, however, that the optimistic development is that due to the pandemic, the necessary digital transformation has accelerated.
Anita Furstenberg, EIB official for Central and Southeastern Europe, said the EIB had reached a € 245m loan agreement with Cyprus in 2020, including funding for the Royal LNG terminal, which would reduce emissions.
Recalling that the EIB will end lending for fossil fuel-related projects in 2021, Ms. Fursternberg said that the EIB is in talks with the Cypriot authorities for new project financing.
Finally, the Deputy CEO of the Bank of Cyprus, Harris Pougare, said that the bank in 2020 granted € 1.4 billion in new loans, proving that even in times of crisis, strict criteria and loan policies can be reconciled.
Noting that the key to supporting businesses and households was the 9-month moratorium on installments by 2020, Mr Poigare said it was gratifying that 94% of the total € 6 billion in moratorium loans had begun to repay their installments. first two months of 2021.
Philenews / ΚΥΠΕ
