The future of the Cypriot economy and which path it should take after the tectonic shifts following recent developments were addressed by three key party leaders at a Nicosia conference on Tuesday night.
Disy leader and presidential candidate Averof Neophytou conceded that the ‘golden passport’ saga had stained Cyprus’ reputation but said that the divergence from Europe’s dependence on Russia and tax reforms could offer real opportunities for development.
The audience heard frank admissions on the state of the economy at the 12th Nicosia Economic Congress, where Akel leader Stephanos Stephanou said that Cyprus had become the black sheep in Europe and a refuge for fraudsters.
The leaders of the three political parties laid out their key proposals going forward, following Russia’s invasion of Ukraine and the consequent EU sanctions on Moscow which many sectors fear will squeeze the local economy.
Addressing the issue of tax reform, Neophytou reiterated that Disy’s underlying philosophy on the economy is “fewer taxes for greater development and more incentives in the private sector”.
He said that while the island had become a tax base for major companies their contribution to the wider economy was “not so strong”.
Neophytou argued that the government has taken steps to bring smaller companies to Cyprus, who in turn will attract staff and workers to the island who will contribute to the “real economy” by paying taxes, renting offices and housing.
He reasoned that crises can also offer opportunities, stating that Cyprus emerged stronger from the 2013 financial shock – pointing to tourism as a bright spot in the economy’s future.
But Akel’s Stephanou said that Cyprus must diversify so as not to be as dependent on just a few sectors, which leave it exposed in times of turbulence.
He also came out in favour of tax reform, saying that simplifying the process and other changes will “tackle corruption, which puts off investors who want to come to Cyprus, because we’ve smeared our reputation internationally.”
As for the fallout from the sanctions and tit-for-tat measures against Moscow, Stephanou said that Nicosia is in a tough spot as it requires and should receive support from the EU but that the island has a reputation as a refuge for fraudsters and as a money laundering destination.
For his part, Diko leader Nicolas Papadopoulos argued that Cyprus must address the imbalances in its economy – referring to overdependence in certain sectors.
He said that tax reforms such as raising corporate tax to 15 per cent would help make domestic companies more competitive but added that incentives are needed to expand sectors such as research, technology, healthcare, and digital reform.