Faced with multiple challenges in the economy will be the new Government, as analysts' estimates speak of a year characterized by uncertainty
Cyprus nominated the 8th President of the Republic of Cyprus. One of the most important chapters for the next administration is none other than financial management. Accuracy, labor issues, sales, interest rate hikes and reforms are, among others, the “hot” potatoes that will fall into the hands of the new Government.
< p>One of the biggest problems facing the Cypriot economy is high inflation, which currently hovers around 8%, gnawing away at citizens' incomes. The exorbitant prices of basic goods, electricity and fuel are very high on the concerns of consumers, because in many cases their financial capabilities are at marginal levels. Therefore, consumption and investments will be affected, which will also be reflected in the growth rate, which is expected to slow down. The new Minister of Finance should give the vulnerable groups of the population compensatory measures to absorb the shocks of the new crisis caused by the war in Ukraine. Special emphasis must also be placed on the reduction of energy costs, which affects households and businesses. All this, of course, will be done subject to the state's fiscal margins.
Interest rates and sales
In the context of accuracy is also the increase in interest rates, as it is already causing a headache to the borrowers, who within seven months have seen their installment rise 5 times and the interest rate to +3%, while the ECB is warning of a new increase in March. The messages that the banks are receiving are that many borrowers are at a breaking point – sustainable – and are asking for restructuring so that their loan does not go into the red. The problem of non-performing loans has plagued the banking system in previous years, which “cleaned up” its balance sheets, but it still troubles many citizens. Foreclosures are starting again and vulnerable borrowers are worried about their first home. The Government should proceed with the creation of a special court for the rapid resolution of financial disputes, but also implement the “Rent for Installment Plan”, in order to protect the vulnerable groups of the population.
There are many fronts in the labor sector as well, as important issues are left pending. One of the issues that the Minister of Labor will face as soon as he assumes his duties is ATA. The Anastasiades Government, after the collapse of an agreement between the social partners, referred the issue to the next Government. It is recalled that the unions request its payment at 65% and a gradual restoration in three years, while the employers request its abolition. An important reform that is to be discussed within the year is also the pension, with the 12% penalty imposed on those who retire at the age of 63 instead of at the age of 65. The purpose of the reform is to reduce the risk of poverty for pensioners, to ensure adequate retirement income, solidarity and fairness between and within generations and to ensure the long-term sustainability of pensions.
The efforts of the Republic of Cyprus should also focus on achieving the milestones of the Recovery and Resilience Plan, which includes a package of 133 measures, of which 58 concern reforms and 75 investment actions. Implementation of the reforms will “unlock” significant investments in sectors including health, land development, industry and technology, which will boost the economy.