Finance Minister urges Cypriot industrialists to seek external investors

Finance Minister Makis Keravnos this week highlighted the positive outlook for Cyprus’ economy and expressed his vision of supporting both small and large Cypriot industrialists in expanding their investments and partnering with foreign investors.

During a speech on Thursday evening at the University of Cyprus, part of an event hosted by the School of Economics and Management, Keravnos mentioned Cyprus’ unique ability not only to sustain its development as a smaller nation but also to play a more prominent role internationally, particularly within the European Union.

Proposing a strategic approach, Keravnos highlighted the need to engage Cypriot industrialists to foster more significant investments.

In addition, he stressed the necessity of encouraging partnerships with foreign investors for joint ventures to address the current account deficit.

Revealing the government’s acknowledgement of Cyprus’s net investment position, which currently stands at 100 per cent of GDP, Keravnos highlighted the gap between money leaving and entering the country.

“This indicator shows that the money leaving Cyprus is much more than what is coming in,” he said.

Keravnos’ speech revolved around three main topics, including the state budget preparation cycle, the EU-Cyprus economic policy, and the elements of the state budget from 2024 to 2026.

Discussing the objectives of the 2024 budget and the Medium-term Fiscal Framework, Keravnos highlighted the need to maintain fiscal balance and address macroeconomic and financial risks.

Moreover, he underlined the impending repayment of a €6.3 billion debt borrowed from the European Support Mechanism (ESM), starting from 2025 until 2030.

Regarding the proposed green tax reform, Keravnos acknowledged the challenging timing amidst rising fuel prices.

He explained that “our effort is to move this issue to the end of the first quarter of 2024, and we are trying to see how we deal with it,” before expressing concerns about the potential impact on public finances and households.

Highlighting the significance of a robust financial system, Keravnos stressed that “we want a healthy financial system because it is the nervous system of the economy and is monitored by the rating agencies”.

Emphasising the key priorities for financial stability, Keravnos detailed the goals of the 2024 budget and Medium-term Fiscal Framework, focusing on financial resilience, debt reduction, and essential infrastructure projects.

He further highlighted potential risks related to the ongoing global crises and other economic factors like inflation and migration.

What is more, Keravnos added during his speech about the economic objectives and compliance with EU guidelines, mainly focusing on growth rates compared to the budget deficit.

Finally, speaking about the suggested green tax changes, he stressed the step-by-step implementation of a carbon tax and the necessity of balancing out the financial impact.