Haris Michael, CEO MHV Mediterranean Hospitality Venture Limited
by Haris Michael*
Cyprus has turned a page, a new chapter has opened for our country. Convergent opinion however remains that the stake is one: To keep our country on a stable path. To achieve this, a strong and resilient economy is essential. A sustainable and prosperous economy.
Certainly there are no easy solutions, no magic recipes. Especially in today's climate of uncertainty, due to the inflationary crisis triggered by the pandemic and intensified geopolitical instability, a structured strategic and methodical work is needed to respond to the challenges.
In this context, it is important to set specific goals and priorities:
- Of capital importance is the continuation of fiscal discipline. With domestic finances, surplus budgets and a state that spends wisely and purposefully. Away from deficits and irresponsible spending. The importance of fiscal discipline was highlighted during the pandemic, where the state managed with the reserves it had available to support businesses, households and vulnerable groups.
- It is equally important to support the pillar sectors of the Cypriot economy, such as Tourism, Real Estate and Services, so that they continue to make a substantial contribution to GDP and the labor market. In particular, the implementation of a comprehensive incentive policy is needed, which takes into account real problems such as:
– High interest rates: The current situation should concern the political leadership, as the increase in interest rates has led to an increase in the cost of investments, as well as the cost of servicing loans. The risk that NEDs will increase at some point is visible. The reduction in interest rates will boost investment activity, with all the consequent benefits for the economy.
– The void created by the cancellation of the Cyprus Investment Program. Despite the weaknesses and problems that have existed, the KEP has had a catalytic contribution to the creation of thousands of jobs, contributing at the same time to the effort to attract investment, the implementation of development projects, the increase of state revenues and the stabilization of our financial system after the crisis of 2013 .We need a new Plan. Serious, strong and reliable, on par with similar designs in other EU countries.
– The cost of running hotels, the cost of supplies and construction materials.
– Compensating for the loss (not only numerically but also in terms of purchasing power) of Russian tourists, as a result of geopolitical developments. Targeting new markets, attracting airlines, improving infrastructure, as well as enhancing the quality of the product we offer, are among the most important. The goal must be to increase tourism revenues alongside arrivals.
- Especially in this international environment, Cyprus needs serious foreign investment more than ever. In order for our country to attract value-added investments with horizontal benefits across the entire spectrum of the economy, it needs to become an even more attractive destination. Decisive steps have been taken in recent years, but there is still room for improvement. In this context, the passing of the investment law will contribute the most in this direction.
- Furthermore, attention should be paid to the backbone of our economy. To citizens and households. With measures that actually increase disposable income, possibly in the context of a tax reform, and by extension their purchasing power, as they will be able to spend more money on their daily needs.
Just as the goal of a strong and prosperous economy is shared, so the effort should be collective. Optimism and self-confidence remain the key in any difficult situation. With a positive spirit, an extroverted strategy and the right targeting, we will manage to cope successfully this time as well.
*CEO MHV Mediterranean Hospitality Venture Limited