President pledges support to boost Tourism in Cyprus

The government pledged continued support to Cyprus’ vital tourism industry promising to upgrade the tourism product for the benefit of all, said President of the Republic of Cyprus Tassos Papadopoulos.

He assured that the government will implement measures it has already announced.

In his address at the opening ceremony of the Hoteliers’ Pancyprian Association General Assembly held in Nicosia, President Papadopoulos said that “our firm position is that Cyprus’ reply to competition is offering quality and a special tourist experience to the visitors of the island”.

“I know and recognize the efforts by the Hoteliers’ association to upgrade Cyprus internationally as a high level tourism destination”, he added.

“The government, evaluating correctly the decisive significance of tourism to the economic development of the island and the people’s welfare, maintains in its priority, interests and aims, the continued upgrading of this key sector”, the President added.

He said the increasing competition from overseas “constitutes a challenge” which can only be handled with “upgrading and adjusting to new conditions and facts which demand the quality of tourism product to secure the quantity of the tourist flow”.

Source: The Financial Mirror

Cyprus keeps rates unchanged

The Cypriot Central Bank has kept interest rates low by announcing it is holding the base rate at 4.5 per cent. The Monetary Policy Committee (MPC) of the Central Bank’s Board of Directors decided to keep interest base rates unchanged. Newly appointed Governor of the Central Bank Athanasios Orphanides thus maintained the current 75 basis point spread between the Cyprus pound and euro key refinancing rates.

The MPC, took into account the recent Convergence Reports issued by the European Commission and the European Central Bank and concluded that the local economy is growing at a satisfactory rate, inflation is kept at low levels (decrease to 1.77 % in April 2007 vs. to 2.96 % in April 2006), and that the economy enjoys a high degree of convergence with the euro zone countries and thus is in good shape to adopt the euro by January 2008.

Cyprus, along with Malta, are expected to adopt the euro on January 1, 2008. Both countries must by then phase out the differential with European Central Bank rates.

Despite the deceleration of inflation, however, the MPC is concerned with the expansion in the money supply and increased bank credit to private sector. As far as bank credit is concerned, the MPC stresses the exchange and interest rate risks involved in foreign currency lending, as well as the negative impact from the widening of the Trade Balance from increased private lending.

"There is no need to be hasty in narrowing the gap [with euro zone rates] earlier than what is required," Orphanides said.

The refinancing rate was last changed in September 2006.

The Central Bank kept its two other rates unchanged. The overnight deposit facility was left at 2.75% and the Lombard rate at 4.75%. The decision was unanimous among the monetary policy committee members, Orphanides said.

He also added that there is no issue of devaluation of the pound ahead of the final fixing in July or when the country adopts the euro.

The Cyprus is poised to be locked against the euro on July 10. The pound has spent two years in the European Union's ERM-2 currency system, trading within plus or minus 2.25% around a central parity rate of 0.585274 pounds to the euro.

Domestic credit growth was running at an annual 18.6% in March. M2 money supply also expanded by 17.0% in March from an annualised 14.0% in February, according to the May issue of the monetary policy report.

Orphanides would not be drawn into discussing the correct value of share or property prices. “Compared to 20 years ago, property prices have risen. As for current prices, only time will show whether prices are over-valued or correctly valued. There are many factors and considerations to be taken into account,” said Orpahnides, adding that banks were not over-extended to the property sector.

Source: Financial Mirror 

President ‘certain’ Cyprus will join Eurozone in January 2008

Cyprus will be able to adopt the Euro as scheduled in January next year, President Tassos Papadopoulos believes, as he said in his address at the Annual General Meeting of the Employers and Industrialists Federation (OEB), pointing out that prices are set to drop with the introduction of the Euro and adding that the country has good prospects to overcome practical difficulties which other states have faced when they adopted the Euro.

The President paid tribute to employers and employees for their contribution to the effort to meet European Union criteria in order to be eligible to join the Euro area and told the consumers that they are the most effective guardian of any attempt to quick profit and price hikes.

Papadopoulos stressed that as soon as Cyprus gets the official green light to adopt the Euro from EU finance ministers in early July, a large scale and serious effort will get underway to inform the public at large about the use of the Euro and its fallout.

He reiterated that the social state will not be sacrificed for the sake of the Euro, pointing out that economic growth has allowed the country to achieve both goals, maintain social benefits and join the Euro area in 2008.

“This year’s AGM assumes special significance as it meets with the expectation, I believe the certainty, that very soon the decision for the introduction of the Euro in Cyprus in January 2008 will be taken,” he said.

He said once this is done a campaign will begin to inform and protect consumers from attempts to raise prices and added “the government believes that prices must be rounded up downwards as Cyprus has all the prerequisites to have a 1 per cent or even bigger drop in prices.”

The Cyprus pound, he explained, is stronger than the Euro according to Cypriot and European experts and locking the pound to the Euro on 10 July should lead to rounding up prices downwards.

He urged consumers to be vigilant and report any attempts to make a profit using the change of the currency as an excuse to put up the prices.

The President said Cyprus has managed to achieve two important goals, accession to the euro area and extension of social benefits to those most in need.

“We shall have tangible benefits for the economy when we adopt the Euro and OEB has made a significant contribution to this,” he said, adding that the government promotes sectors that strengthen new investment.

In his speech at the AGM OEB President Andreas Pittas described the adoption of the euro and the accession to the EU as “a historic political, economic and social success”, noting that important socio-economic changes are taking place and local business has shown adaptability and responsibility.

“The European framework offers us safeguards for continuous economic growth, fiscal discipline and political stability,” he said and called on everybody to continue working for a favourable climate to maintain a high level of competitiveness.

On the social security fund, he said all parties concerned must work very hard to address difficulties and implement in good time the necessary policy no matter how painful that may be.

Minister of Labour and Social Insurance Antonis Vasiliou assured the meeting that the government is taking all necessary measures to secure the viability of the social insurance fund.

He said OEB has contributed in a constructive manner and has worked with flexibility and inventiveness and urged the federation to continue investing in new technologies, IT, research and human resources.

The minister said employing workers from other countries is a necessity for Cyprus, which must secure equal treatment and must be controlled.

Source - Financial Mirror

Over two fifths of Brits plan to move overseas

Research undertaken by GfK financial for Bank of Scotland International, from a representative sample of 1,321 surveyed between 24th and 30th April 2007, found that 42% are interested in buying property abroad or moving abroad.
 
When asked where they would most like to live in the world, Britons ranked Australia in the top spot with 10%, followed by New Zealand at 9%. America and Canada were joint third with 7% each. France topped the European destinations with 6% of people wanting to move there, followed by Spain at 5%.
 
Out of the 42% of people who would like to own property abroad, the largest proportion were based in the South East (18%), followed by the North West and London (10%). However, only 4% of respondents surveyed already owned property abroad, with 28% of these based in the South East.

Source: OPP

Top 10 Property Investment Countries for 2008 Revealed in Jet-to-Let Survey

The top 10 countries of most interest to foreign property investors in 2008 have been revealed in a survey conducted by property investment magazine, Jet-to-Let.

In order to provide an up-to-date snapshot of investor intentions in 2008, Jet-to-Let magazine surveyed 1000 new readers who recently subscribed to their free quarterly investment magazine. The results, which provide an interesting comparison with a similar survey conducted last year, show that investor interest is continuing to shift away from the UK buy-to-let market and towards foreign investment opportunities.

Over 50% of investors said they wish to invest in foreign property in the next 24 months, with 35.8% keen to invest in the next 12 months. The number one country for investors was found to be Cyprus, which is unchanged from 2007, with France and Spain ranked second and third. There were three new entrants this year – Italy, ranked at seven, the United Arab Emirates at eight and Brazil, which came in at tenth place.

Dominic Farrell, editor of Jet-to-Let magazine and author of the bestselling property investment book, The Jet to Let Bible, says he’s not surprised that Cyprus scored the top slot in the survey. “The adoption of the Euro on 1st January 2008, the interest rate cut, oil and gas finds offshore and low taxes continue to make Cyprus very attractive for investors and homebuyers alike,” he says.

“France and Spain will always be in the top three for UK and Irish buyers, but the relegation of Spain to number three reflects the change in market conditions and an erosion of confidence following the recent property market scandals, principally in Marbella,” Dominic explains.

Bulgaria, Poland and Portugal all notably dropped out of the 2008 top 10 league, after being featured in last year’s ratings. According to Dominic, “This reflects the ongoing changes in their respective property markets and the perception by investors that there are better opportunities elsewhere.”

Overall, the survey highlights the fact that interest in foreign investment opportunities is still going strong, helped in part by the inflated housing market in the UK and the small returns on offer here, compared to good returns in other countries.

Summing up the current choices of property investors, Dominic says, “We have seen a significant increase in investing in overseas property since the beginning of 2008, which reflects an ongoing ‘substitution’ away from UK, Irish and US property, as well as equities and other financial products. A well-selected, cashflow-positive property in a country with a sound legal framework and economy will always beat alternative investments hands down.”

The Jet-to-Let 2008 top 10 survey results are:

1.Cyprus
2.France
3.Spain
4.Germany
5.USA
6.Morocco
7.Italy
8.United Arab Emirates
9.Turkey
10.Brazil

The top 10 in 2007 were:

1.Cyprus
2.Spain
3.France
4.Morocco
5.Portugal
6.Bulgaria
7.USA
8.Germany
9.Turkey
10.Poland

Cyprus and Malta get euro boost

Cyprus and Malta may soon swap their currencies for the euro. Cyprus and Malta look set to be the next EU members to adopt the euro after their applications cleared the first major hurdle.

Their bids to join the single currency next year were backed by the European Commission and European Central Bank.

They will become the 14th and 15th members of the eurozone on 1 January 2008 if EU leaders and finance ministers give their approval.

Both have been members of the European Union since May 2004.

Good progress

If all goes to plan, EU finance ministers will fix the euro exchange rates for the Cyprus pound and the Maltese lira during a two-day meeting on 9 and 10 July.

Voluntary dual pricing in the national currency unit and the euro is already widespread in Malta, particularly in tourist shops, analysts say.

It also currently applies in Cyprus on receipts in big department stores and in tourist resorts.

The last country to adopt the single currency was Slovenia, which joined the EU at the same time as Malta and Cyprus.

The European Central Bank said both would-be eurozone members were making good progress in meeting the necessary economic performance criteria, as set out in the Maastricht Treaty.

These cover government debt, currency stability and interest rates.

However, the ECB added that further efforts were still needed, particularly in curbing their high debt ratios.
 
Source BBC News 

“Flash estimate” Cyprus GDP at 3.7% in first quarter

According to the “flash estimate” produced by the Cyprus Statistical Service, CYSTAT on Tuesday, GDP growth rose in real terms in the first quarter of 2007 by 3.7% compared with the first quarter of 2006.

Flash estimates are common practice in the EU but this is the first “flash estimate” produced by Cyprus.

Flash estimates are not accompanied by the usual quarter-on-quarter GDP figures or revisions to previous quarters. This means that it is not possible to know at this stage whether a 3.7% growth rate constitutes an acceleration or a deceleration in growth.

However, based on our own calculations, either growth of economic activity accelerated in the first quarter or GDP growth was higher than previously reported in earlier quarters.

Looking at the indicative indices mentioned by Cystat, a case could be made either way.

On the one had, tourist arrivals (Jan-Mar) fell by 3.9% year on year and tourism revenue (Jan-Feb) by 4.5%. Electricity output (Jan-Mar) fell by 2.0% and exports of goods in the same period by 11.4%.

At the same time, manufacturing (up 0.5%) and building permits (up 3.1%) and telecommunications output (up 3.9%) rose fairly modestly in Jan-Feb and imports of goods rose by just 3.4% in the first quarter.

On the other hand, retail trade (Jan-Mar) rose by a strong 8%, air transport (Jan-Feb) by a stronger 9.3% (despite the drop in tourism) and financial intermediation services (banking) by an astonishing 25% in the first quarter.

Although tourism remains the single most important sector in Cyprus, it seems that domestic demand, driven by an awful lot of bank credit, is driving growth.

Source: Financial Mirror

Bank of Cyprus says unscathed by global crunch

Bank of Cyprus said on Wednesday it was unscathed by the global credit crunch, but said it had no immediate plans to expand into new markets.

The Bank, Cyprus's largest lender, posted a 55 percent increase in its 2007 group net profit to 485 million euros and restated its profit guidance for 2008 to 540 million euros, an 11 percent increase over 2007. It is scheduled to release its first-quarter results on May 28.

After a year which saw it launch full banking activities in Russia and clinch a deal to acquire a bank in Ukraine, the bank told shareholders on Wednesday expansion into additional new markets was not foreseen in the near future.

"We expect 2008 to be a year of entrenchment in (existing) new markets, further expansion of our network in Greece and an increase in market shares in Greece and Cyprus," outgoing chairman Eleftherios Ioannou said.

"Although expansion into new markets is not among our immediate plans we are looking at conditions in countries of an interest to us through the presence of representative offices so when we decide to proceed we know the conditions on the ground," he told shareholders at its annual general meeting.

Chief Executive Andreas Eliades said the bank was not exposed to risks from the American sub prime crisis, which has had a domino effect throughout the global financial sector.

"The Bank possibly has the most robust liquidity in the Greek and Cypriot markets because the main source of finance are its client deposits, which are increasing," Eliades said.

Board members elected local real estate businessman Theodoros Aristodemou as its new chairman. Ioannou stepped down after reaching retirement age.

Source: Reuters

Cyprus to become business and investment hub

The Cypriot government aims to turn Cyprus into a regional business and investment hub. The Commerce, Industry and Tourism Minister Antonis Michaelides commented “In the past three years, Cyprus has achieved high rate of growth in satisfactory conditions of employment and low unemployment”.

The government, Michaelides went on to add, is making every effort to promote business through the technological upgrading, the modernization and the expansion of existing industries and encouragement for export trade as well as improved plans and programmes for government grants.

On the energy front, he said the country has to secure its energy needs and bringing into the country natural gas for electricity purposes.

Speaking about tourism, Michaelides said the goal is to modernize and enrich the local tourist product, in line with the strategic development plan for 2003-2010.

Source: Financial Mirror

Registered unemployed drops 2.6% in Jan-Apr

The number of registered unemployed reached 11,419 in April 2006, compared with 12,986 people in March 2007.

The Statistical Service reported that the decrease was mainly recorded in the sectors of hotels and restaurants, transport and trade.

For the first four months as a whole, unemployment fell by 2.6% compared with the same four months of 2006 to 13,566.

Source: Financial Mirror

New marina planned in Famagusta

Southern Cyprus planning authorities have announced plans for the development of a new marina in the Famagusta region of the country.

The marina will be built in the Golden Coast Fishing Harbour region, near to the Avgeniros Gardens and Kalliope Villas. A fishing shelter will be built at Aiya Tirada beach.

 

A range of new facilities will also be built on the development, including restaurants, cafés, pubs and a museum.

 

The regeneration of the area will result in an increase in capital growth for Cyprus – great news for investors who have purchased property to let, as interest in the region will amplify when a completion date is set.

Cyprus passes final Maastricht test

Cyprus appears to have passed the final Maastricht test in what could be the last inflation report before the country’s European partners consider whether Cyprus has met all the Maastricht criteria for adopting the euro.

The EU-harmonised consumer price index in April rose by 1.6% compared with April 2006, slightly higher than the 1.3% recorded in March.

However, the all-important 12-month rate fell slightly, to 1.9% compared with 2.0% in March.

In order to meet the Maastricht inflation criterion, the 12-month harmonised inflation rate in Cyprus must be no more than 1.5 percentage points above the average 12-month harmonised inflation rates in the EU countries with the lowest inflation figures.

In March (latest available data), these were Finland at 1.2%, Poland at 1.5% and Sweden and the Netherlands, both with 1.6%. This yields an average of 1.4% and thus a Maastricht target of 1.4% + 1.5% = 2.9%.

If the 12-month EU rates for April are the same as in March, Cyprus will have met the criterion with a full 1% of leg room.

On May 2nd Cyprus passed its two-year anniversary within the Exchange Rate Mechanism (ERM2). Eurozone member states as well as the Commission and the European Central Bank will now consider whether Cyprus has fulfilled all four Maastricht criteria on inflation, exchange rates, fiscal performance and interest rates. 

A country must spend at least two years within ERM2 without devaluation or serious currency fluctuation in order to meet the criterion on exchange rates.

This requirement has already been met. The maximum shift in the rate of the Cyprus pound against its central parity rate within the euro (0.585284 per euro) since 2005 has been 2% but even then, the pound was stronger than the central parity rate. Today the pound is much closer, at just 0.4% above the central parity rate.

The two other criteria relate to fiscal performance and interest rates. The budget criterion was met in 2006 with a general government deficit of only 1.5% of GDP (the threshold is 3%) and the public debt criterion will probably be deemed to have been met because the debt/GDP fell from 69.2% of GDP to 65.3%, even if it was not below the ideal 60% threshold.

Long-term interest rates have long been within range. So that leaves only the nagging Greek Cypriot worry that someone out there will use the decades-old Cyprus problem as an excuse to veto Cyprus.

The Cyprus problem complicates EU business in all kinds of unrelated areas and Greek Cypriots currently take most of the blame for lack of progress in solving the problem.

Germany quashed rumours last month that it would veto Cyprus by confirming that Cyprus would be judged in accordance with the treaty rules. But rumours popped up again that a veto could come from another quarter.

Source: Financial Mirror

Expats in Cyprus

According to Gulf Weekly thousands of expatriates are enjoying the financial benefits afforded to foreign nationals who take up permanent residence in Cyprus. Lower costs of living, favourable tax regime and a warm, sunny climate have all contributed to the island’s success story.

The publication also highlighted that housing costs are playing a powerful role in helping UK nationals to decide where to relocate. The price of a house in Cyprus is much lower than that of a comparable property in a place such as Spain or France and the island is currently benefiting from a prospering economy.

 

The report concluded that “Cyprus [is] firmly in the top slot for Britons seeking a more attractive destination in retirement”.

The Telegraph also recently highlighted the appeal that Cyprus has for foreign nationals and property investors, citing the recent change from pounds to euros, favourable interest rates and rising house prices.

Cyprus property prices record strong first quarter rise in 2008

Property prices in Cyprus have recorded a 3.3% increase in the first quarter of 2008, according to the BuySell Home Price Index. This takes the year-on-year increase to 18.6%.