Finance minister Constantinos Petrides assured that the government will not be reinstating the Cyprus Investment Program (CIP), that was shut down after the shocking corruption revelations that emerged through an Al Jazeera investigation and the subsequent stark criticism by the European Commission.
“A scheme associated with the previous one cannot be implemented again,” Petrides said during his annual lecture at the University of Cyprus’s School of Economics and Management.
Acknowledging that the scheme contributed to the reduction of non-performing loans and created thousands of jobs following the 2013 crisis, Petrides however also admitted that “the scheme’s focus on the real estate sector was beginning to create imbalances to the detriment of domestic demand.”
The lecture was focused on the effects of the coronavirus pandemic with the Minister stating that “the crisis of the Covid-19 pandemic was indeed unprecedented,” and is one from which Cyprus “will not emerge unscathed.”
He cautioned that “the termination of economic activity is to a large extent ongoing with various alterations and it is expected to continue at least until a large part of the population is vaccinated,” noting that “the development of this crisis is determined by health parameters and not by economic data, which leads to increased uncertainty.”
The Finance Minister said Cyprus is exploiting European funds to the best possible degree, stating the EU is not a fiscal Union and as such there are not fiscal transfers or “free money.”
“European funds must be repaid either through contributions (to the Resilience and Recovery Fund) or through loan repayments (such as SURE),” he said, recalling that absorption of funds of the Recovery Fund will depend on voting and implementing structural reforms.
On the government support measures which amount to €1.3 billion, Petrides said the government will continue to update them according to the changes in the country’s epidemiological image.
But he stressed “the lack of such measures would have led to a much deeper and protracted recession from the one we are witnessing today, with a recession close to 10% with huge consequences in the labour market with long term structural problems to the economy.”