Relations with China Strengthened

The centre-piece of an official visit to Cyprus by Chinese Vice-Premier Hui Liang on 21-22 November was the signature of memorandums of co-operation in the fields of agriculture and fisheries and the environment. They signalled the desire of the two sides to strengthen bilateral relations on the basis of the historic visit to China by President Tassos Papadopoulos in December 2006 (see CN 12/2006).

Speaking after talks with President Papadopoulos and other Cypriot leaders, Vice-Premier Hui reaffirmed China’s support for the independence, national sovereignty and territorial integrity of Cyprus. Endorsing the 8 July 2006 agreement providing for preparatory bicommunal talks, he said that as a permanent member of the UN Security Council, China would continue to back efforts for a just Cyprus settlement.

On bilateral relations, Vice-Premier Hui described them as being at the highest point in their history, with economic and trade co-operation in constant development, while political trust was being continually strengthened.

Launching a Euro-China Business Week in Nicosia on 19 November, Commerce, Industry and Tourism Minister Antonis Michaelides said that Cyprus “is best positioned to serve as a stepping-stone for Asian products and businesses to the EU and Near East markets”. Chinese Ambassador Zhao Yali agreed, pointing out that in the first nine months of 2007 China-Cyprus trade had reached a record aggregate value of US$505.6 million.


Plans Announced for Floating Gas Terminal

Plans for an interim floating natural gas terminal were confirmed on 19 November by Commerce, Industry and Tourism Minister Antonis Michaelides, who stressed that the longer-term aim was the construction of a land terminal at the Vassiliko energy complex. The plans are a key part of the Government’s strategy for fulfilling its EU commitment to switch from oil to natural gas for electricity generation within a decade.

Mr Michaelides said that tender documents would be prepared for bids to build an offshore terminal to bring in gas for a five-year period to give the necessary breathing-space for the construction of a land terminal. The Government also intends to set up a Public Natural Gas Company to import and distribute the fuel in Cyprus.

The proposed floating gas terminal is strongly opposed by the state-owned Cyprus Electricity Authority (CEA) and by the CEA trade unions. They see it as a diversion from the need to build a terminal on land as quickly as possible.


Larnaca Airport is Ahead of Schedule

The new multi-million-pound international airport at Larnaca will be ready ahead of schedule in mid-2009, said President Tassos Papadopoulos on 9 November during a visit to the construction site. The airport is being built by the Hermes Airports consortium, which is also carrying out the redevelopment of Paphos international airport due for completion by the end of 2008.

Paying tribute to the “high quality work” being carried out by Hermes in the Larnaca construction, President Papadopoulos announced that following completion in June 2009 the first passengers would pass through the airport in mid-November 2009.

The new five-story Larnaca airport will have 100,000 sq metres of covered area and the capacity to deal with 7.5 million passengers a year. There will be 67 check-in desks and eight automatic check-in gates. The cost of the two new airports, including future extensions, is currently put at €622 million.


Sarris Calls for More Competitiveness

A call for Cyprus to step up its economic competitiveness globally and within Europe was made by Finance Minister Michalis Sarris on 1 November. He was responding to the latest Global Competitiveness Report showing that Cyprus had fallen to 55th place in an assessment of 131 countries and to 23rd place among the 27 EU member states.

Compiled by the World Economic Forum in Davos, the report found that Cyprus had slipped three places in the competitiveness ranking of the 125 countries assessed last year and by six places with the inclusion of six new countries this year. The USA topped the latest ranking, followed by Denmark, Sweden, Germany, Finland, Singapore, Japan and the UK. The EU members below Cyprus in the table were Malta, Greece, Romania and Bulgaria.

Mr Sarris pointed out that a country’s competitiveness depended not only on what it was doing but also on what others were doing, noting that Asian and Latin American countries in particular had taken steps to compete more effectively in a global economy. He said that as it approached euro-zone membership on 1 January 2008 Cyprus needed to intensify its efforts to become more competitive, within the “positive framework” of economic stability created by the Government’s policies.

Mr Sarris also expressed confidence that as a result of the Government’s information campaign the vast majority of Cypriots would know all about the switch to the euro before it took place on 1 January. An upgraded official website launched by Mr Sarris (www.euro.cy) gives comprehensive information on the changeover.

A report from EU Economic and Monetary Affairs Commissioner Joaquin Almunia on 27 November said that both Cyprus and Malta were well prepared for their changeover to the euro on 1 January, less than four years after they joined the EU. Sr Almunia said that the Cypriot and Maltese peoples could be proud of becoming part of “the largest monetary area of the developed world”. His report was greeted as “very positive” by Mr Sarris for its praise of Cyprus’ information campaign and level of preparation.


2007 Budget Surplus

A 2007 budget surplus of about 1.5 per cent of GDP was predicted by Finance Minister Michalis Sarris on 16 November, so that Cyprus would enter the euro zone on 1 January 2008 with its fiscal deficit eliminated two years ahead of schedule. Stating that “we have managed to exceed our expectations”, he also confirmed that Cyprus would achieve a “remarkable” 4.3 per cent rate of economic growth in 2007.

Stressing that the Government’s vision “is a competitive economy for the citizen’s welfare”, Mr Sarris noted that a C£121 million package of measures had been introduced with the aim of helping vulnerable groups (see CN 10/2007). He warned that rising world oil and grain prices would push up the rate of inflation in 2008 and ruled out any further increase in state benefits or tax cuts.

The Central Bank of Cyprus (CBC) on 12 November left its interest rates unchanged, although CBC Governor Athanasios Orphanides said that if Cyprus had not been about to join the euro-zone, rates would have been increased to curb “the continued rapid increase of credit”. He added that the required alignment of Cyprus’ rates with the euro-zone would be achieved either by cutting CBC rates in December or by automatic alignment on 1 January.


Revenue from Tourism Maintains Upturn

Revenue from tourism rose to C£154 million in September, 6.4 per cent more than in the same month last year, bringing total receipts in the first nine months of 2007 to C£897 million, a rise of 7 per cent compared with January-September 2006. Tourist arrivals in October slipped by 2.8 per cent year-on-year to 275,103, although the total for January-October, at 2,247,596, was 0.6 per cent up on the same period in 2006.

Arrivals from the UK, which fell sharply in the early months of 2007, recovered in the summer and autumn, so that the January- October total was only 4 per cent down on the same period in 2006. Visiting London on 13 November for a World Travel Market exhibition, Cyprus Tourism Organization chairman Panos Englezos was hopeful that the final 2007 figure for arrivals from the crucial UK market, accounting for over half of tourists to Cyprus, would be close to last year’s total.

A display set of Cyprus’ first euro coins, which become legal tender on 1 January 2008, can be purchased for 228 per set - from the Central Bank of Cyprus (CBC) in the case of domestic collectors and from the Mint of Finland for those abroad. Also available from the CBC, to collectors at home and abroad, is a mint condition set of the last cent coins of the Cyprus pound at a cost of C£10 per set. The sets will be on sale from 3-21 December.