Finance Minister Harris Georgiades said on Tuesday that the importance of the citizenship by investment programme should not be overestimated.
Speaking at The Economist conference in Nicosia, the minister said both those who supported the programme and those who disagreed “try to create a picture that we depend on it”. He added: “This is not true.”
The programme, which was introduced in 2014 when economy was in deep recession, is said to have generated €6 billion by the end of 2018 and that some 4,000 Cyprus passports had been issued to third-country nationals that invested in the country.
“The impact is positive but relatively small,” insisted Georgiades. “I must admit in the initial years we made some isolated mistakes. We have to acknowledge it. We made some corrective moves from the beginning of this year including more credible audits.”
Georgiades said that unlike in the past, the investments Cyprus is now seeing were “real” and have a physical presence “and are not in the shape of shell companies or outsized foreign bank deposits,” he added. “These are bad practices that we have left behind us and they will stay in the past,” he said.
The citizenship by investment programme had come under attack in recent weeks after it was reported that eight Cambodians, with close links to their country’s authoritarian regime had been granted passports.
At the weekend it was revealed that Malaysian businessman, Jho Taek Low, wanted by the authorities of his country and elsewhere, had been granted a passport in 2015. On Monday President Anastasiades said that Low’s passport should be revoked.
Earlier this year, the government, responding to criticism about lax procedures, introduced much tougher criteria for the scheme and has also decided to use the services of three companies to carry out due diligence checks on all applicants.
Georgiades said that members of the private sector, which deal with the citizenship scheme, were complaining the new strict framework had killed the programme.
“I do not agree with this. We have to understand the good name of our country is more important than selling another villa,” Georgiades said.
Anita Tuladhar, IMF mission chief for Cyprus also commented at the conference during a Q&A, saying there were some concerns about the scheme. “What we’ve seen is that investors have gone primarily to the high-end property market,” she said.
“There is some concern that this might lead to a boom and bust cycle.”
She said the IMF has seen some pickup towards that in the sector but this has not yet spilled over into other sectors as yet, she said. “Tightening up is a step in the right direction”.