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2002-06-26 09:44:33

It is with great pleasure that I address the General Meeting of the Employers and Industrialists' Federation (OEV).

Firstly I would like to congratulate the leadership and the members of OEV for their creative cooperation and their overall contribution to the economic development of Cyprus. I would also like to express my satisfaction for their constructive contribution to maintaining industrial peace in Cyprus. Industrial peace constitutes a basic requirement for the continuing improvement of the living standards of our people.

The Cyprus economy is going through a crucial period marked, mainly, by the terrorist attacks against the United States and the instability that followed the war in Afghanistan. However, we could say that once more the Cyprus economy has proved that it can cope successfully with conditions of uncertainty. It has showed a remarkable adaptability. The dynamism and flexibility of the Cyprus economy constitute elements that lead Cyprus to stability, even in hard times. The role of the OEV on this level is and will be decisive.

It is worth mentioning that in 2001 and despite adverse developments in the world economy, the rate of growth of the Cyprus economy has reached 4% while inflation was kept down to 2%. Unemployment was only 3% and so we have conditions of full employment.

The fiscal deficit in 2001 reached 2.8% of the Gross Domestic Product (GDP), which meets the relevant Maastricht criterion. The public debt, which amounts to 54.5% of the GDP also meets the Maastricht criterion.

As it is well known, the comperative advantages of Cyprus are mainly in the area of Services. The contribution of the Services sector in the distribution of the GDP exceeds 75%. According to the latest figures the Cyprus economy has gradually began to reduce its dependence on the tourist product with the increase of the contribution of other Services such as telecommunications, and financial and professional services.

It is estimated that this development along with the timely government intervention has helped economy to face quickly and effectively the adverse repercussions of the international tragic events.

Moreover, Cyprus aspires to reinforce the supply of educational, medical, shipping and other services, utilizing its strategic position in the region and its future accession to the European Union.

For the current year indications for the Cyprus economy are satisfactory. The rate of growth will be around 3%, the fiscal deficit will decrease further to 2.5% of the GDP and inflation, excluding the increases in indirect taxes, will be kept at 2%. It is expected that conditions of full employment will prevail in the job market while unemployment will be at about 3.3% of the economically active population.

Business activities in Cyprus mainly in industry and commerce, show a satisfactory record. The government?s basic goals concern the maintainance and reinforcement of the key area of industry on the basis of current challenges that we face. These challenges relate to the aspect of globalization and Cyprus?s forthcoming accession to the European Union. In this new international economic environment, beyond the unavoidable increase in competition, business opportunities for Cyprus will also increase.

Our goal is to utilize the opportunities to increase exports of Cypriot products. In this framework several opportunities are opening up in the field of the new economy, particularly information and high technology. An important factor is that Cyprus has in its disposal the necessary human resources as well as the necessary infrastructure to develop into an economy ? oriented to the provision of high tech services.

The government, through its proposal to radically reform the tax system has given an impetus to its efforts for modernization. With the cooperation of the Parliament and the political parties, the proposal for tax reform has been successfully concluded, thus contributing to the closing of the chapters on Taxation and Competition. Particularly as concerns enterprises the provision to essentially decrease company tax to 10% along with the incentives given for joint ventures and company mergers, are expected to increase investments and the effectiveness of Cyprus enterprises.

It would have been a great omission not to refer to the Cyprus Republic?s most important success since it gained its independence, that is Cyprus? accession course to the European Union. The process of Cyprus? accession is already materializing through the harmonization with the acquis communautaire. Cyprus is just one step away from accession, having closed almost all chapters.

Summing up, I would like to express the certainty that the future of Cyprus economy creates important possibilities for Cypriot entrepreneurs. We are convinced that the policy we follow, in harmonious cooperation with all productive classes of the country, will give a new impetus to the development of the economy within the framework of the European Union.

Concluding, I would like to express my appreciation to the President and the Members of the Board of OEV for their work. I assure you that you will have the maximum possible support on the part of Government.

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