Although the outbreak of the pandemic in the west of 2021 indicates in the most emphatic way that to a large extent everything remains fluid, the plans and goals for the local economy in the new year, have been made given that we are coming out of the crisis and uncertainty that brought by the coronavirus.
This is reflected in the "financial correction" budget for the new year, which was voted in favor by Parliament on December 17. Although with a clear reduction in the deficit compared to 2021 (-5%), the 2022 budget will also be in deficit by -1,1%. The growth rate is expected to reach 4% while GDP is projected to reach € 23,66 billion.
The goals and the main challenges for the government's financial staff remain, the promotion of structural reforms and the "assurance of fiscal stability and high growth rate".
Moreover, the digital reform and the transition to a green and circular economy that concern all European States, are for Cyprus key objectives that will be gradually realized in the coming years with reforms and projects for the implementation of which, as mentioned below will projects worth millions of euros are announced in 2022.
Also in terms of the "heavy industry" of the place, tourism, the goal is to "approach the yields of 2019".
A series of strategic reforms in 2022
The reform of the public service, the judiciary and the local self-government, in addition to being necessary for the improvement of the state function, become critical because they are prerequisites that must be completed in 2022, in order to disburse connected funds from the Recovery Fund.
- Tax reforms
The G20 decision to apply a global corporate tax rate of 15% also speeds up tax reform processes in Cyprus, which will offset any loss of advantage that may result from an increase from the current corporate tax rate of 12,5%. 15% that will go.
Already from the floor of Parliament on December 15, the Minister of Finance, Konstantinos Petridis, announced a series of tax changes that will be implemented within the new year. Reduction or abolition of the fee of € 350 for companies, Reduction or abolition of the extraordinary contribution on the calculated and / or actual distribution of dividends, reduction of 17% or its abolition in case of reinvestment, reduction of the defense contribution rate on credit interest, adjustment of VAT rates etc.
- Plans to attract investments in the wreckage of KEP
Moreover, it seems that the financial losses caused by the resilient abolition of the KEP of "golden passports" will try to compensate from the government camp, with new "more rationally structured and targeted" programs to attract investment. Specifically, from January 1, "the program to attract investment in high-tech sectors, and the removal of market distortions" will be implemented, which according to Konstantinos Petridis "aims to turn Cyprus, in the coming years, into a successful, reliable and competitive business cocoon ».
"Frontline" work
Already in the last four months of the year we are leaving behind, discussions on a number of work-related issues have begun well.
- Minimum wage and telework
The establishment of a National Minimum Wage dominates the dialogue that takes place within the Labor Advisory Body, between representatives of the Trade Unions and Employers' organizations and on the other hand, the Minister of Labor Zeta Aimilianidou. In 2022 it is considered certain that the establishment of the Minimum Wage will be completed and passed in a State Law.
In addition, in the new year, the legislative regulation of teleworking is expected to take shape, which especially after the arrival of the pandemic and in our country, was adopted by a large number of companies and employees, with all evidence converging that it will remain a working model and after the pandemic.
- Employment framework for workers from third countries
The reshaping of the "employment framework for third-country workers" is another issue that is expected to "lock in" in 2022 and even at the beginning of the new year. In addition, relevant procedures have already been launched, and significant developments are expected even within January. This would "calm down" a large number of companies and employers who claim to have serious staffing problems, thus making the smooth running of their businesses uncertain. The biggest problem, according to employers' organizations, is in the tourism sector (hotels and restaurants) and therefore, any decisions must be made quickly to get businesses ready for the new tourist season.
- Retirement
And after the above issues are "closed", the new year will also start the in-depth dialogue for the pension reform. Already the first public reports made by officials and stakeholders, show that the agreement between the social partners and the government on this issue will be anything but easy. However, as Zeta Aimilianidou stated in an interview, the regulator of the pension will be largely the National Minimum Wage, since "as it affects the minimum amount of contributions to the fund for employees, employers and self-employed and consequently the amount of pensions of these persons ".
Announcement of projects with sponsorships of € 150 million.
For the transition to the green and circular economy but also the digital transition, in 2022 is planned the announcement of a series of projects with grants that reach 150 million euros. These are projects which, according to the Minister of Energy, Trade and Industry, Natasa Pileidou, aim to "stimulate the Cypriot economy" by reducing the operating costs of businesses and households and green growth.
Specifically, within 2022, the following plans will be announced:
- Processing and trade of agricultural products, € 25 million
- Digital business upgrade, € 20 million
- Provision of consulting services to companies, € 5 million.
- Support to Large Industries, € 7 million
- Development of the circular economy, € 13 million.
- Energy upgrade of companies and local authorities, € 40 million.
- Energy upgrade of houses, € 35 million.
- RES and FDI Fund plans for thermal insulation, installation of photovoltaics and water heaters and charging points for electric vehicles, € 7-8 million.
Return to normalcy and for Tourism
For the past two years, the pandemic has kept the country's "heavy industry", tourism, entrenched. In the new year, goals have been set to return to the levels of 2019. Of course, the implementation of these goals depends on the evolution of the pandemic.
However, the plans for the improvement of the tourism product of Cyprus are there and concern the following six actions, which are the responsibility of the Ministry of Tourism for 2022.
- Enhanced digital marketing. The Ministry of Finance has secured approval from the Ministry of Finance, a budget of 5 million euros for digital marketing that will allow advertising in Cyprus abroad 12 months a year.
- Upgrading the product offered, strengthening special forms of tourism and spending on infrastructure improvements.
- Development of areas that have not yet been sufficiently developed for tourism, such as the mountains, the countryside and the outlying areas, with multifaceted activities such as the Heartland of Legends route.
- Development of domestic tourism, such as the Extraordinary Plan for Support of Domestic Tourism, which was extended until the end of March 2022.
- Collaboration with tour operators and airlines, with more targeted advertising collaborations, in order to penetrate markets that have a full-year flight schedule.
- Implementation of actions included in the Recovery and Sustainability Plan, for which approximately 3 million euros are foreseen in the budget and for which four plans will be prepared.
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