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Fiscal council calls on authorities to take tough stance on sanctions

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Sanctions on Cyprus are threatening the country’s development, the fiscal council warned on Thursday as it called on both the executive and legislative branches of the state to take a tough stance over the matter.

“The adverse selection on compliance issues has also turned into a long-term risk that threatens development. It is now a question of economic viability for the country, beyond meeting the international investment position of our economy.”

In a statement, it stressed Cyprus is heavily reliant on foreign investments and “the negative impression Cyprus has created has far-reaching ramifications. It is equivalent with a cost for foreign investors potentially interested in operating in our country.”

In the absence of these investments that Cyprus needs for trade deficits, the only route available for the country is an increase in public and private debt “with ramifications that are as long-lasting as they are negative.”

The council highlighted any potential laxness in compliance from Cyprus’ part works against proper competition as businesses and organizations that choose full compliance are at a competitive disadvantage against those that circumvent or laxly adopt the requirements.

“To this end, we call on the legislative and executive authority as we all as supervisory bodies, to take a tough stance against such phenomena and to adopt a ‘compliance-plus’ policy, as some private institutions have done, in order to aggressively restore not only unfair competition but also Cyprus’ ability to attract high-quality investors, which it desperately needs.”

The council stressed it acknowledged that strengthening compliance was not without cost, with a likely negative impact to the economy but was still necessary.

Reversing moral hazard and adverse selection in foreign investment is in itself a significant investment in the future of the economy, it added.

Meanwhile, a team of experts working for the British government are set to arrive to Cyprus to offer advisory services for the island’s national sanctions control unit (Emek) which is set to work as an independent authority.

A team of US experts is also going to come to Cyprus for the same reason.

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