With a predicted stable GDP growth of 2.5% until 2019, Cyprus continues being one of the fastest developing European economies. Harris Georgiades has been at the helm of the Ministry of Finance in the crucial years during which the country managed to overcome the consequences of the economic and financial crisis.
European Times: What are the major achievements done during your mandate?
Harris Georgiades: Four years ago, we were facing an unprecedented economic and financial crisis. The pace of our recovery has been tremendous. We worked closely with the International Monetary Fund and the European institutions in a focused and ambitious manner, and now we have an entirely different situation. We have restored the growth prospects of our economy. Cyprus now enjoys one of the highest growth rates amongst the European countries, close to 3% of the GDP. We are implementing a growth-friendly economic policy, which includes many incentives for new business and investments, a very stable and attractive tax regime, as well as support for entrepreneurship across the sectors.
European Times: Cyprus exceeded all expectations in exiting recession in 2015 just two years after the crisis. The Eurogroup hailed the country as a success story in meeting targets a year earlier than expected. Which steps did you take to achieve this? How did you improve the quality of the banking and financial services?
Harris Georgiades: The successful recovery and successful exit from the support program were to a larger extent a result of the improvement in the outlook for Cyprus. The growth of the economy, the gradual reduction in unemployment, the restoration of the soundness of the banking sector and the materialisation of the number of investments were mutually reinforcing processes which have enabled the recovery and continue to create business and investment opportunities. The growth potential in Cyprus is very significant, and the country has strong competitive advantages in a number of sectors. Tourism, for example, has been a huge success, becoming a vital industry.
Regarding banking and financial services, we made changes in the regulatory framework, supervision is now conducted essentially by the European Central Bank, and corporate governance was significantly enhanced. A series of other steps were taken through a joined effort of the government, the supervisors and the banks themselves, enabling the restoration of the confidence towards our banking sector. Now we have a smaller, but a much healthier banking sector which can finance the needs of the economy from a much more credible and sustainable basis. Cyprus has confirmed that it offers a unique hub of expertise, local know-how and very well trained workforce. Our modern and efficient legal and supervisory framework have enabled the banking and finance services to remain stable, to retain their potential and be one of the fundamental pillars of the Cypriot economy.
European Times: There appears to be some controversy concerning the privatisation of the telecommunications company CYTA. You have further recommended privatising the state lottery and the Cyprus stock exchange. What would these measures mean regarding investment opportunities?
Harris Georgiades: We are ready to utilise all available tools which will further encourage the influx of investments, bring in know-how, expertise and improve the competitiveness and productivity of our economy. We have a program which includes privatisation, concessions and licensing. Through this program, we are licensing what is going to be the largest integrated casino resort in Europe, a project which will commence during 2017. We have seen the privatisation of the largest port, that of Limassol and we want to continue along the same path to include the second sea port of Larnaca, by the end of this year.
We have some attractive government owned real-estate including an excellent estate in the mountainous resorts of Troodos which we want to licence out to investors, and likewise with the state lottery. Finally,we also see the scope for a strategic investor in joining the government in the ownership and management of CYTA, and despite the hesitations on behalf of the parliament we hope that we shall find a way forward.
European Times: Cyprus has hosted for the first time an Annual General Meeting of the European Bank for Reconstruction and Development (EBRD). How did this event promote Cyprus as an investment hub?
Harris Georgiades: It was a major event for Cyprus, gathering around 2.000 people, decision makers and government officials, but also private sector representatives, bankers, investors, and business people. This major annual event was also an opportunity which we used to emphasise the close ties we have with the EBRD, as one of the largest international financial institutions.
European Times: What is your personal message?
Harris Georgiades: My personal message would relate to our experience that implementing a growth-friendly economic policy, paired with private sector support and encouragement is delivering results. That is what we have been doing in Cyprus over the last few years, and this is what we should continue doing in the future. Cyprus is a credible and reliable member of the European Union, an excellent and safe destination to do business, which investors should seriously explore.
