Finance Minister Constantinos Petrides on Thursday evening said that Cyprus should maximise its comparative advantages in order to turn the investment funds sector into a means of attracting investments from Europe and the Middle East.
Petrides who was addressing the AGM of the Cyprus Investment Funds Association (CIFA) in Nicosia, said: “This sector is particularly important, especially when considering that we are now entering a new economic era that will start to alter the situation we knew until today.”
He said the medium-term goal of CIFA was the doubling of investment fund assets in Cyprus, from a total of €11.6 billion at the end of 2021 to €25 billion in the near future.
The minister assured the audience, which included investment fund and finance industry stakeholders, that the government would continue to provide support to their efforts.
“We want to bolster and modernise the sector so that we can usher it into a new era,” he said.
Petrides spoke about the difficulties that governments were now facing, particularly in terms of energy costs.
“Over the past few decades, economic growth hinged on affordable energy, but we are now entering a time when the green transition is both a challenge and an objective,” Petrides said.
“The green transition requires billions in funding and this necessitates much more involvement from the private sector,” he added. He also underlined the need to attract environmental, social, and corporate governance (ESG) funds.
ESG funds received $649 billion in investments during the first eleven months of 2021, according to data from financial services firm Refinitiv Lipper.
Cyprus’ own green bond is expected to be officially issued by the end of the year. He also praised the sector’s contribution to the local economy, noting that “€2.5 billion have been invested in Cyprus, creating jobs and boosting incomes”.
Petrides said it was not a coincidence that during the crisis caused by the pandemic, Cyprus’ GDP contraction was much smaller than countries in the region. This went against the narrative of Cyprus having a one-dimensional business model.
“This is due to the fact that significant leaps forward have been made in the sector, particularly with the good cooperation between stakeholders, the government and the Cyprus Securities and Exchange Commission (CySEC), something which must continue,” Petrides concluded.
CIFA president Andreas Yiasemides said that the objective to double the sector’s size is part of the strategy of turning Cyprus into one of the top investment fund destinations in Europe.
“The investment fund sector showed a lot of resilience during the pandemic, not only avoiding any contraction but actually managing to grow during that time,” Yiasemides said.
It grew by 47.6 per cent between 2019 and 2021.
“We are convinced that in the coming years there will be even greater growth in the sector,” he added.
CySEC vice-chairman George Karatzias spoke of the war in Ukraine and its effects on Cyprus, particularly after the imposition of sanctions on Russia.
“The commission is in close cooperation with the Finance Ministry, as well as other local and European authorities, taking all necessary measures, in order to ensure the smooth operation of the capital market in Cyprus and the European Union,” Karatzias said.
“According to information available to the commission, sanctions have affected a number of supervised entities and, depending on the case, we provide guidance or supervisory action,” he added.