Thursday, 7 March 2013

Economic Challenges and Priorities for Cyprus


The two-round Cypriot presidential election in February provided Nikos Anastasiades of the DISY Party with a convincing majority for his election as President. The election has widely been heralded as a success by domestic and international media, ending a period of instability brought about by the former President, Dimitris Christofias, whom many commentators blame both for the Mari disaster as well as for a less-than-optimal handling of Cyprus’ bail-out request to the European Union.
It is important to note amidst this euphoria that in concrete terms, little has changed with the election of the new President. An important issue is that the composition of Parliament has not changed, and that the new government will be forced to work with the Parliament that existed before the elections. This Parliament comprises 6 parties, which is a high number given the low population of Cyprus, and engenders a certain extent of political fragmentation.
The objective of this article is to examine the economic challenges and opportunities facing the new government in the first 12 months of its administration. It does so non-politically and non-ideologically, based on economic priorities and not political considerations.
There are four major economic challenges and opportunities facing the government:
  1. Negotiating the bail-out package
  2. Restructuring the public sector
  3. Effective regulation and restructuring of the banking sector
  4. Promoting sustainable foreign and domestic investment
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