Cyprus at a Glance_EN

Economy Even though the political problem remains unresolved, the free market economy in the government-controlled area made remarkable recovery since 1974. The economic success was attributed to, among other factors: the adoption of a market-oriented economic system, the sound macroeconomic policies of successive governments, as well as the existence of a dynamic and flexible entrepreneurial community and a highly educated labour force. During the last three decades, the Cyprus economy turned from agriculture to services and light manufacturing. Cyprus is, today, a major tourist destination as well as a modern economy, offering dynamic services with an advanced physical and social infrastructure. On 1 January 2008, the Republic of Cyprus joined the Eurosystem and introduced the euro as its official currency, replacing the Cyprus pound. The international economic crisis had a major impact on the economy of Cyprus and as a result, the Government was compelled to apply for assistance to the support mechanism provided by the EU Commission, the European Central Bank and the IMF (the “Troika”). A loan agreement as well as a macroeconomic adjustment programme (Memorandum of Understanding - MoU) were concluded with the Troika in the spring of 2013, aiming at restoring economic stability. Three years later, on 31 March 2016, Cyprus exited the economic adjustment programme, having successfully implemented its provisions addressing fiscal, banking and structural challenges, signaling that Cyprus is coming out of the recession. Eurogroup, IMF and EU officials have commended Cyprus on its hard work and commitment as well as on the important achievements made, including but not limited to the impressive turnaround of the economy which returned to positive growth in 2016, expanding by about 3,4%, the stabilisation of the banking sector, the restoration of the fiscal position to a sustainable path, the reduction of public debt, the regained access to international capital markets and the continuous upgrades of its creditworthiness by international rating agencies. It is emphasized that the government has proclaimed its commitment to maintain prudent macroeconomic and fiscal policies and to continue promoting structural reforms. It also aims at maintaining Cyprus’ advantages, such as its sophisticated infrastructure and favourable tax system, so as to further improve the competitiveness of the economy. Moreover, the forthcoming natural gas explorations in the Exclusive Economic Zone (EEZ) of Cyprus are expected to reveal sizeable reserves of natural gas, which will have significant revenue implications for Cyprus in the medium term. 24