Central Bank: Cyprus fulfills criteria to join Eurozone on January 1st, 2008
Nicosia, Nov 20 – The general situation of the Cyprus economy, the indexes and numbers, as well as its harmonization with the acquis communautaire are such which indicate that all criteria for Cyprus’ accession to the Eurozone on January 1st 2008 are fulfilled, Central Bank of Cyprus Chairman Christodoulos Christodoulou has said.
Speaking before the House Finance Committee, Mr. Christodoulou said that “in fourteen months we have to join the Eurozone and this is within our potential.”
As regards the improvement of the public deficit and public debt indexes, Mr. Christodoulou warned of the need to remain vigilant.
He also said that rates in Cyprus converge even more with those in other EU member states and with those of the European Central Bank.
As to the Cyprus pound-Euro exchange rate, the Chairman said that the Cyprus currency has been over reevaluated during the last years, and if it has to return to last year’s rate, when the Cyprus pound joined the Exchange Rate Mechanism II (ERM II), this will not be deemed as devaluation.
Mr. Christodoulou also stated that he considered the data concerning inflation, unemployment, public deficit and public debt and foreign exchange inflow as satisfactory.
As regards the Gross Domestic Product development rate, he noted that it is expected to reach 3.7%-3.8% in 2006 and 3.8%-3.9% in 2007.
Asked about the development in the Turkish occupied north of Cyprus, Mr. Christodoulou said that even thought the data provided cannot be considered reliable, it is estimated that development ranges between 7%-11%.
He said that the proportion of the per capita income during 2004 between the occupied and the government controlled areas of the island was 1 to 3, while now it is 1 to 2.
Mr. Christodoulou said that a recent study showed that approximately 50 million pounds by Greek Cypriots go into the occupied north or the state in the form of pensions, or salaries to Turkish Cypriots who work in the government controlled areas.
He noted that 25 million pounds are spent by the Turkish Cypriots who cross to the government controlled areas.