Cyprus High Commission Trade Centre in London
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Cyprus on the road to recovery A resilient nation 4 Saving the banks 6-7 A place in the sun 10 Wednesday February 18 2015 2 1GZ Wednesday February 18 2015 | the times the times | Wednesday February 18 2015 1GZ 3 times2Cyprus: road to recovery thetimes.co.uk/Cyprus Cyprus: road to recotimes2very GETTY IMAGES As the recovery gathers Nation turns page to a pace, cafés have sprung Facts and figures behind a proud republic up across the island 6 With a land area of attracted waves of the EU since 2004. The summers when 9,251 square kilometres, invaders, Greek, ruling party is the temperatures rise Cyprus is the third Assyrian, Roman and Democratic Rally. above 80F in the hills brighter, vibrant future largest island in the Turkish, each leaving and on the coast and Mediterranean and sits traces of their culture. 6 The population is just into the 90s in Nicosia. between Turkey, Israel The British ruled from below 900,000 and the and Egypt in the east. 1878 until granting currency is the euro, 6 Total number of International Monetary Fund and significant reserves of natural gas in Nicosia is the capital independence in 1960. which replaced the tourist arrivals last year The calm stoicism ratings agencies all anticipate a return the Aphrodite field in Cyprus’s and Mount Olympus pound in 2008. was 2,440,000, with to growth in 2015 and the trade and exclusive economic zone. If the the highest point at 6 The government of 871,000 from Britain, of its people has hospitality sectors are already leading reserves are large enough, they could 1,952m. the Republic of Cyprus 6 The Cyprus climate 637,000 from Russia the way. turn Cyprus into an exporter rather is a democracy, which is subtropical, with and 100,000 from both played a major President Nicos Anastasiades, than importer of energy but that will 6 Its strategic position has been a member of mild winters and hot Greece and Sweden. elected in the depths of the crisis in almost certainly require co-operation part in recovery, February 2013, told an investors from Israel and also faces opposition summit last week: “I can state with from Turkey. confidence and certainty that we have The Turks occupied the north of the writes Tony Dawe turned the page, that the economy is island in 1974 and are now claiming now on the road towards full recovery. rights to the gas reserves which has hile Greece stands on “The financial sector has been further worsened relations with the the brink of ejection restructured and recapitalised, mainly Cyprus government and made any from the eurozone if it through big international investors, early hope of reconciliation even fails to reach and our credit institutions have passed more unlikely. Wagreement over the with success the recent European The war forced only a temporary terms of its financial bail-out, its stress tests. Fiscal imbalances have halt to tourism, which has remained a neighbour Cyprus, which was in even been addressed and important mainstay of the economy. Britain deeper crisis, is on the verge of structural reforms are well underway. continues to send the greatest number economic recovery. National Cyprus is returning to the of tourists to Cyprus but numbers have resilience, measures to safeguard the international markets, far earlier than been dropping and the recent boom in shipping and tourism industries and anyone predicted.” Russian tourists has also halted with continued support for its business and While foreign investors led the the revaluation of the rouble. financial services have saved the recapitalisation of the country’s failing The country still offers delightful country from disaster and brought banks, international institutions are and diverse choices for visitors, with smiles to faces that have been defined now looking at the opportunities that wooded hills and mountains sweeping by sadness. growth might offer, especially in retail down to spectacular beaches, The latest figures show Cyprus still and resort developments. The Neolithic, Roman and medieval in recession, with the economy president is also hoping that investors monuments, a late-developing wine shrinking by 0.7 per cent in the fourth will support an ambitious privatisation industry and a full range of sporting quarter of last year, but the statistics programme, targeted initially at the activities. With new airlines and routes are in line with forecasts that also state telecoms and power companies. arriving, the tourism sector seems set predict the economy will recover this The long-term outlook will be to match the growth expected across year. The European Commission, the further boosted by the discovery of the whole country. The 10 days that rocked Cyprus Island’s resilience eases pain of biting recession Cyprus became the fifth to spare savings under bank that is investing €100m in the recapitalise the financial sector and role in Europe’s changing energy victim of the eurozone crisis €20,000 from the tax. The The medicine has country, forecasts 0.7 per cent growth. consolidate public finances. dynamic. “We have already seen in 2012 as mounting problems government had to scramble Libor Krkoška, head of the EBRD’s This helped Cyprus return to the foreign direct investment from in Greece put its banks under to put together a new plan been hard, but the office in Nicosia, says: “Consumer capital markets last June with an companies like Halliburton and intense pressure. Its lenders to find the billions of euros spending held up better than was oversubscribed €750m sovereign bond Schlumberger, with other major had made loans to Greek needed to meet the bailout economic outlook expected initially.” He pointed to issue. A few months later, Moody’s, the international energy players setting up borrowers worth almost twice conditions. strong performances in the tourism ratings agency, upgraded the country’s shop in Cyprus to use it as a regional the island’s economy. By the end of the week, MPs is healthier, says and leisure sectors as firms moved rating to B3. energy hub in southeast Europe.” In June it began had approved a plan to split swiftly to cut prices and offer better The vote of confidence by financial But the country still faces negotiations for an the second largest bank, Laiki, value to holidaymakers. investors is echoed by overseas challenges, both domestic and international bailout but the into “good” and “bad” banks, Phil Thornton “Overseas companies continued to businesses coming to the island. external. Unemployment remains issue came to a head early which would take on use Cyprus’s business services, such as Foreign direct investment actually stubbornly high at 15 per cent. And one Saturday in troubled assets and t the depths of its financial crisis accounting and legal services, and did rose during the crisis. while youth unemployment has fallen March 2013, when deposits over almost two years ago, the not leave as was initially predicted.” Charis Papacharalambous, director by 18 per cent since October 2013, one Cypriots woke up €100,000. But Aoutlook for Cyprus was a long Harris Georgiades, who took over as general of the Cyprus Investment in three is still out of work. to discover that arguments about and painful recession in the wake of a the country’s finance minister in 2013, Promotion Agency, says: “For a lot of Cyprus has a close financial the government the levies on multi-billion euro bailout that saw its says the root cause of the optimistic investors, it is a combination of a relationship with Russia and the had agreed a individual second largest bank shut and a hefty outlook is the “resilience” of the transparent legal framework based on ongoing crisis in Ukraine will have a €10bn rescue savers still tax slapped on wealthy savers. island’s businesses and citizens. English common law, probably the negative impact — as will the latest deal that threatened to The troika of the European “Key industries like tourism, best all-around tax system in the EU, speculation of a break-up of the imposed a one- sink the deal. Commission, International Monetary shipping, business and financial and the strength and expertise of eurozone following Syriza’s victory in off tax of 6.75 per Finally in the Fund and European Central Bank that services have retained their Cyprus’s legal, financial and the Greek election. cent on bank early hours of funded the €10bn rescue package competitive edge, their strength and administrative support services, which Harris Georgiades: cautious optimism But Krkoška remains upbeat. “Given deposits below Monday, March 25, expected the island’s economy to their prospects,” he says. “It is this makes the country an attractive what both the public and private €100,000 and 9.9 per Cyprus struck a last- contract by almost 9 per cent in 2013 resilience which has shielded us from investment destination.” customers get better value for money.” sectors have shown over the last two cent above that. ditch deal for the €10bn and 4 per cent 2014. the worst of consequences from an The government has also pressed Now that the foundations have been years, I believe Cyprus will be able to The announcement on bailout that prevented a But, instead, it shrank by only 5.4 otherwise severe financial and ahead with a privatisation programme put in place, the question is where overcome those negative external March 16 of what economists sovereign bankruptcy. per cent in 2013 and 2.8 per cent last economic crisis.” with greater determination than fellow medium-term sustainable growth will factors. Of course it will make call a “bail-in” triggered a Deposits below €100,000 were year.