Cyprus: The 5th Limassol Economic Forum: The Recovery Debate

The 5th Limassol Economic Forum, which took place on 28 November, was hailed as a great success by attendees and received extensive media coverage in Cyprus and abroad. The Forum was organised by InBusiness and IMH and attended by a wide range of businesspeople, professionals and other senior decision-makers from the public and private sectors. Prominent figures from the world of politics and economics, including several ministers and ex-ministers, gave the audience their views and analysis of recent economic developments in Europe, conveying thought provoking ideas and stimulating extensive debate on the topic of economic recovery. Andreas Neocleous & Co LLC had an active role in the panel presentations and coordination of discussions. We have supported the Forum since its inception and have seen it become Cyprus's premier business event, and we look forward to continuing our successful collaboration.

The Cyprus economic situation: the minister's view

Mr Haris Georgiades, Minister of Finance, presented the latest data on Cyprus's GDP and unemployment rates, noting that progress has been made in areas such as streamlining the public sector, balancing the government budget and reducing public debt. The Minister commented on the actions taken by the government to implement the programme of economic reforms agreed with the "troika" and noted that for the first time since 2009 there has been a reduction in the number of public sector employees, to a current level of 48,300 compared to 50,600 in 2012 and 53,400 in 2009. The Minister concluded that while Cyprus still has some way to go, it is moving in the right direction.

Recovery, stagnation or relapse: assessing the EU's economic prospect in the aftermath of the crisis

One of the most challenging presentations was given by Professor Iain Begg, Professorial Research Fellow at the European Institute at the London School of Economics and Political Science. Professor Begg presented the chronicles of the unfolding euro crisis in a timeline since 2007 and commented that extensive reforms in relation to fiscal discipline, strategies pacts and compacts and regulatory matters have been ongoing since the onset of the crisis. On the question of whether further reforms will succeed, Professor Begg outlined current uncertainties which are likely to influence the course of future reforms, such as the widening north-south gap in credit terms and dissenting opinions within the EU. The importance of restoring more normal lending, persuading governments to act and finessing legal challenges were mentioned as key factors for recovery. Professor Begg also mentioned the recent €300 billion investment package proposed by Jean-Claude Juncker and whether it will actually help boost growth and jobs or whether it is just a re-labelling of existing initiatives.

Political uncertainty – the obstacle to economic recovery

Lord Michael Dobbs, bestselling author of the book 'House of Cards' (which was later adapted as a TV series and won an Emmy), associate of Margaret Thatcher when she was Prime Minister and former Deputy Chairman of the Conservative Party, gave one of the most interesting presentations throughout the Forum. Lord Dobbs commented on European uncertainty, which has not yet shown signs of ending. He commented on the rising of new, alternative political parties and movements and the electorate's changing perceptions and attitudes as regards traditional opposition parties. Lord Dobbs highlighted the need for European unity and integrity and called for European policy to return to its roots of solidarity and common values.

Capital market union in the Eurozone

Graham Bishop, nominated as a Member of the European Commission's Expert Group by President Barroso, Special Advisor to the House of Commons Treasury Select Committee and to the House of Lords European Committee in the UK, gave a detailed presentation on the concept of a capital market union which would complete financial integration and bolster financial stability as well as promote the effective implementation of euro-monetary policy in all parts of the Eurozone economy. He further analysed the need for funding an investment-led EU recovery and the need to educate retail investors about the risks and rewards of holding capital instruments rather than "guaranteed" bank deposits. He then presented the possibility of opening the door further to the euro as a global reserve currency, whereby requirements would be to have a sound economy, a fully developed financial system capable of handling the scale of flows and a good supply of safe, liquid financial assets.

The privatisation process in Cyprus

One of the presentations receiving most attention at the Forum was given by Constantinos Herodotou, Commissioner of Privatisation, regarding the ongoing privatisation process. Mr Herodotou discussed the process in relation to the Cyprus Telecommunications Authority and the Electricity Authority of Cyprus. Mr Herodotou explained the role of the Privatisation Unit, which was established under the Privatisations Law of 2004, which sets the legal and institutional framework for privatisations. The Privatisation Unit is the executive body for the implementation of decisions of the Council of Ministers and is directed by the Commissioner of Privatisation. Priority has been given to CYTA, and tender procedures have been put in place under EU procurement rules for the appointment of specialist advisors. Mr Herodotou explained that the privatisation process is a multi-stage process with secure multiple objectives, and stressed the importance of advance planning and preparation, especially in terms of cooperation between transaction parties, stakeholder communication and management and clear decision making.

Panel discussions

The Forum also gave attendees the opportunity to participate in two very interesting panel discussions. The first panel included a brainstorming session on the economy of Europe with world-class journalists. Top business and economics editors and correspondents including Tony Barber, Europe Editor of the Financial Times, Eder Florian, correspondent for Die Welt in Belgium and Jason Karaian, former European editor of CFO magazine and financial editor of the Economist Intelligence Unit as well as senior Europe correspondent for Quartz, engaged in a stimulating debate on economic media correspondence and major financial issues. Elias Neocleous, Vice-Chairman of our firm, coordinated the discussions, which provided for stimulating debate. In his opening statement, Mr Neocleous raised the question whether austerity is becoming the new norm and whether mass unemployment will persist. He also raised challenging questions for the panelists on the robustness of the banking system and the extent to which the measures that have been implemented are real, or merely cosmetic.

The second panel, which was composed of Notis Mitarachi, Deputy Minister for Development & Competitiveness in Greece, David Edmonds, global head of lead advisory services at Deloitte UK, and Alexis Atteshlis, principal in Oak Hill Advisors LP in the UK, assessed Eastern Mediterranean investment opportunities. Nicos Kyriakides, partner and head of financial advisory services at Deloitte Cyprus, coordinated an animated discussion between the panelists and members of the audience.

Outcomes and conclusions

Tony Barber, Chairman of the Forum, closed the event and thanked all the attendees and speakers for a constructive dialogue. The conclusion he took from the Forum was that European governments are running out of time to convince electorates across Europe on the success of their policies and that Europe should concentrate on financing growth and stabilizing its currency while at the same time working on mechanisms which will put real money back in European economies, through a targeted investment-friendly policy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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