Cyprus Business Now: weekly wrap-up

Here are the top business stories in Cyprus from the week starting January 1:

Mortgage-to-rent scheme a favourable arrangement, Hellenic Bank released on Tuesday a statement welcoming the recent launch of the mortgage-to-rent scheme, which went into effect on December 4, 2023, describing it as a favourable way for eligible borrowers to settle their loan obligations.

Famagusta hotels are pessimistic about January — efforts made to attract guests from Nordics, Central Europe, which hotels in the Famagusta district are expected to see occupancy rates ranging between 20 and 30 per cent during January and February, according to Panayiotis Constantinou, president of the Famagusta Hoteliers Association (Pasyxe).

Speaking to the Cyprus News Agency (CNA) on Tuesday, Constantinou explained that while there was some tourism activity during the Christmas holiday period, hotel occupancy averaged around 50-60 per cent.

However, he noted that January is expected to pose certain challenges, primarily related to decreased tourist interest.

Cyprus banks saw an increase in deposits and loans during November 2023, according to the Monetary and Financial Statistics report, valid as of December 2023, released by the Central Bank of Cyprus (CBC) this week.

Paphos hotels prepare for difficult January — alternative markets explored. The hotels experienced a moderate occupancy rate in December, ranging between 35 and 40 per cent, according to Evripides Loizides, president of the Paphos Hoteliers’ Association (Pasyxe).

Loizides also said that the sector is trying to cope with lost arrivals due to the conflicts in Israel and Ukraine by targeting alternative markets in Europe.

Speaking to the Cyprus News Agency (CNA), Loizides explained that despite initial expectations, December turned out to be a “good month.”

Cyprus’ economic climate worsened in December 2023, accompanied by increased economic uncertainty, according to a report released this week by the University of Cyprus’ Economic Research Centre (CypERC).

According to the report, the Economic Sentiment Index (ESI) decreased by 4.6 units compared to November.

The decline in the ESI, the CypERC explained, “stems from the weakening of the business climate, mainly in services and, to a lesser extent, in construction,” while the business climate in retail trade and manufacturing did not show significant changes compared to November. However, consumer sentiment strengthened significantly.

ECB to test banks’ digital resilience — exercise includes two Cypriot banks. In a proactive move aimed at fortifying the resilience of financial institutions against evolving cyber threats, the European Central Bank (ECB) has unveiled plans for a comprehensive stress test involving 109 banks under its direct supervision.

This strategic exercise, scheduled for 2024, marks the first stress test for Eurozone banks, and will also involve two Cypriot banks, the Bank of Cyprus, and the Hellenic Bank.

Furthermore, the ECB’s approach in this stress test deviates from the conventional emphasis on preventing cyber-attacks. Instead, the focus will be on evaluating how these banks handle and recover from a successful cyber-attack.

Red Sea attacks threaten supply chain, Cyprus Shipping Chamber warns. Director General of the Cyprus Shipping Chamber Thomas Kazakos said that there is an urgent need to address the Houthi attacks against ships sailing through the Red Sea, stressing that these pose a risk to the global supply chain.

Kazakos underlined the vulnerability of an island state like Cyprus, where 98 per cent of trade relies on maritime transportation.

New board for Cyprus’ Natural Gas Corporation unveiled. The cabinet on Thursday announced the new board of directors at the Natural Gas Public Corporation (Defa), the state-run entity with the exclusive rights to import and distribute natural gas in Cyprus. The appointees will serve for 30 months. Energy Minister George Papanastasiou made the appointment recommendation to the cabinet, which endorsed it. According to a statement, the selection of the new board members came about through the process of the Advisory Council – a new body set up under the present government.

Hermes Airports reports record 11.6 million passengers in 2023. Hermes Airports, which manages and operates Cyprus’ two international airports, on Thursday announced that it recorded a surge in passenger traffic during 2023, tallying over 11.6 million passengers by the end of the year.

This number signifies an average of 32,000 passengers per day throughout the year, soaring to 41,000 in summer and remaining robust at 18,000 in winter.

Cyprus’ investment funds sector set to grow in 2024, association reports anticipating another favourable year for the investment funds sector in Cyprus, despite any challenges and prevailing uncertainties.

According to the association, Cypriot investment funds were required to exhibit resilience and bolster the growth dynamic of the Cypriot economy in 2023, a goal they managed to achieve.

Keravnos confirms 2.44% CoLA increase consequently, employees in both the public and private sectors, entitled to the Cost-of-Living Allowance (CoLA) will receive a 2.44 per cent wage increase from this month.

The increase, based on the automatic adjustment of wages in line with the consumer price index (CPI), will be in place until the end of the year. The rate of inflation fell to 3.5 per cent in 2023, according to the state’s Statistics Department, and is significantly lower than the 8.4 per cent it was at the end of 2022.

New tax system to maintain Cyprus as competitive financial centre. The economist overseeing the project for the finance ministry announced on Friday that preliminary proposals for changes to the tax law will be submitted in March 2024. This follows the completion of all initial studies by that time.