Eurogroup chief praises Cyprus’ ‘impressive recovery’

Eurogroup President Paschal Donohoe praised Cyprus’ “impressive recovery” from the coronavirus outbreak on Thursday, stressing that this performance was the result of good national policies coupled with good decisions taken on a European Union level.

In a visit to Cyprus on Thursday, Donohoe met Finance Minister Constantinos Petrides who appeared optimistic that the island could recover most, if not all, the ground lost during the pandemic, in the first few months of 2022.

In a joint press conference, both Donohoe and Petrides highlighted the importance of Ireland and Cyprus’ membership of the EU and the Euro area.

“The performance of the Cypriot economy its recovery is so impressive, it has been led by a combination of the right national economic decisions and then the right decisions at a European level and I believe the mixture of these decisions will allow the people of Cyprus to continue to recover from the effects of this disease,” Donohoe said.

Highlighting the island’s ability to bounce back from the crisis, Donohoe said that according to the European Commission projections, Cyprus is set to post a growth rate of just over 4 per cent this year and just below 4 per cent in 2022.

“That is a really strong economic performance in the context of how difficult this disease has been and it is a particularly strong performance given how Cyprus like many other countries in Europe places great value on tourism for employment and also for economic growth,” he said.

Donohoe encouraged reforms and changes as the EU is set to “begin the journey back to sensible economicrecovery  decisions and to lower levels of borrowing,” but he did not elaborate on when the EU will bring back the fiscal rules of the Stability and Growth Pact which has been suspended since the outbreak of the Covid pandemic.

“We are all borrowing to support our economies at the moment because we have to, because we need to and we all will at the right point begin the journey as to how we reduce our borrowing and to go back to more normal economic policies and we will as a Union (discuss on) what is the right point at which we begin that journey and when that journey begins, we all need to pay our part in implementing the decisions that will be needed then,” he said.

Petrides said that following a downturn of 5.1 per cent in 2020, the lowest among other EU members with sizeable tourism sectors, the EU Commission expects a 4.3 per cent growth for 2021.

“So, we believe that by the beginning of 2022 we would have covered most, if not all, of the lost ground due to the pandemic,” he said.

The Cypriot Minister once more stressed the high degree of uncertainty, adding that Cyprus still utilizes the EU flexibility clause to continue providing assistance to stricken businesses. “But our joint effort is to gradually return to normality,” he said.

Asked about his country’s position on the proposed agreement for a 15 per cent minimum corporate tax rate, Donohoe said they wanted to see an agreement on OECD level because an agreement, if reached, could bring stability in issues that do matter in the future of the global economy.

“I also want to see an agreement that is capable of recognising small and medium sized economies as well and it is for that reason that the discussions on global minimum effective tax rate are sensitive and difficult,” he said.