Month: January 2023

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Cyprus banking sector’s solvency ratio at 21.2%

The Cyprus banking sector’s total solvency ratio rose to 21.2% in the third quarter of 2022, reaching the highest level in the Central Bank of Cyprus’ data on the banking sector’s key aggregate financial indicators.

According to the CBC, the total solvency ratio in the end of September of 2022 marked an increase of 60 basis points compared with the previous quarter, while compared with the third quarter of 2021 the index recorded an increase of 90 basis points.

The Cyprus banking sector CET1 ratio in the third quarter amounted to 18%, recording an increase of 50 basis points, while the annual rise amounted to 80 basis points, according to the CBC data.

The improvement in the Cyprus banking sector’s capital indices mainly reflects the de-risking in the bank’s balance sheet and the continued reduction in the non-performing loans.

However, according to the data, efficiency remains the banking sector’s main challenge as cost-to-income ratio continued its upward trajectory and peaked at 82.6% in the third quarter of 2022 compared with 71.7% in the previous quarter of 2022.

With regard to income, net interest income in the third quarter of 2022 amounted to 74.3% of total income compared with 70.3% in the previous quarter, an increase driven by the normalisation of the ECB’s monetary policy which began in July this year.

Furthermore, net fee and commission income amounted to 29% of total income in the third quarter of 2022, increased by 0.3% compared with the previous quarter but up by 4% year on year.

Cash balances and loans converge

On the asset side, the data show a gradual convergence of cash balances with total loans as a percentage of total assets, reflecting the banking sector’s continued deleveraging since the 2012 – 2013 financial crisis.

At the end of September 2022 total loans represented 41.2% of the banking sector’s total assets compared with 41.5% in the previous quarter. Cash and cash balances deposited at central banks amounted to 37.3% of total assets in the third quarter, compared with 36.9% in the previous quarter and 33.9 in September 2021.

Source: Cyprus News Agency

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President inaugurates projects in Famagusta district

Cyprus President Nicos Anastasiades visited on Tuesday the government-controlled area of Famagusta district where he inaugurated a number of projects implemented during his term of office.

Speaking during a visit he paid to “Thalassa” Museum in Ayia Napa Anastasiades said that Cyprus economy’s growth rate in 2023 reaches 5.8%, with expenses for infrastructure projects being increased by 500 million euros and a surplus on the basis of which the next government, which will take over on March 1st, will make its estimations about its policies.

Moreover Anastasiades said that the projects which have been implemented and are underway have generated progress and have created prospects for further economic, social, tourist and cultural growth in every district, municipality and community.

Addressing the inauguration ceremony of the new Famagusta District Court, Anastasiades said that it constitutes part of the reform of the justice system in Cyprus.

“Since I took over my duties it was a primary goal to reform the justice system. This reform was certainly not an easy one due to the various views either of the lawyers or the judges of the Supreme Court,” Anastasiades said, adding that through an intensive dialogue they achieved radical reforms in the justice sector and with the implementation of the relevant law justice will be administered more quickly.

At the same time he stressed that no one has ever questioned the character of judges and the validity of justice in Cyprus.

Speaking during the inauguration of the Social Welfare Centre in Sotira community, Anastasiades said that in order to implement infrastructure projects it is necessary to have local authorities with a vision which pursue cooperation and for the government to listen carefully to the problems which the local communities are facing.

He noted that the cost of the projects in the government-controlled Famagusta district is over 150 million euros, adding that 71 projects have been implemented or are underway.

In his speech during the inauguration of works aiming to rejuvenate the central area of Ayia Napa, Anastasiades said that projects speak by themselves, noting that during the last ten years there was a regeneration of municipalities and communities.

He noted that these projects are co-financed by EU funds which were absorbed, and noted that role of the local authorities to this end.

Anastasiades said that through prudent policies the state was able as of 2015 to announce and implement projects which amount to 5 billion euros, adding that these are significant infrastructure projects in all districts.

In his speech during the inauguration of the public kindergarten in Frenaros district, Anastasiades said that it is important to invest in the education of children since their early childhood.

“It is in this framework that the government decided to reduce the age of children who are entitled to education in kindergartens without paying any fees,” he added.

Source: Cyprus News Agency

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Cyprus strongly condemns attack at mosque in Pakistan

The Foreign Affairs Ministry said in a post on its Twitter account that “Cyprus strongly condemns the horrific attack at the Peshawar mosque in Pakistan. Sincere condolences to the families of the victims and to the Government and people of Pakistan. Any acts of terrorism, including targeting religious sites and worshipers are condemnable,” the Ministry noted.

Source: Cyprus News Agency

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Cyprus remained the country with the highest level of NPLs in 2021, according to Eurostat

In 2021, Cyprus remained the country with the highest stock of non-performing loans (assets) of the general government, at 20.2% of GDP, according to data released by Eurostat, the statistical service of the EU.

According to a press release, this was due to a large transaction in 2018, whereby non-performing loans from a Cypriot public financial corporation (classified outside government) were transferred to a government unit.

Three other EU Member States recorded a share higher than 1% of GDP: Slovenia (1.8%), Portugal (1.4%) and Croatia (1.1%). For a significant majority of EU Member States, non-performing loans decreased in 2021 compared with 2020.

For Cyprus, Slovenia and Portugal, the majority of non-performing loans refer to loans of financial defeasance structures. In the case of Croatia, the figure mainly refers to the loans of a national development bank (classified inside general government).

Highest rate of government guarantees recorded in Germany

This data was released as part of data on contingent liabilities and government guarantees on liabilities in the EU. The most common form of contingent liabilities in the EU countries is government guarantees on the liabilities, and occasionally, on the assets of third parties. In 2020 and 2021, government guarantees provided in the EU increased notably, following the onset of the COVID-19 pandemic.

In 2021, the highest overall rate of government guarantees was recorded in Germany (17.3% of gross domestic product; GDP), Austria (17.0%), Finland (17.0%), Italy (16.0%) and France (15.2%).

On the lower end of the scale, rates of less than 1% of GDP were recorded in Ireland, Bulgaria, Czechia and Slovakia.

The rate recorded in Cyprus was 5.95%, which is rounded up to 6% for the purposes of graphs released by Eurostat.

In most EU Member States, the central government is the predominant guarantor. A notable level of state and/or local government guarantees can also be seen in Finland, Denmark, Sweden, France, Austria, Germany and Belgium.

In some countries, the stock of government guarantees increased by as much as 11.2 percentage points (pp) of GDP between 2019 and 2021 (pre-COVID-19 to the end of 2021). Generally, guarantee growth decelerated in 2021 compared with 2020 (the first year of the pandemic). In 2021, the guarantee rates in some countries decreased in terms of % of GDP, which was also due in part to GDP growth.

The level of liabilities of public corporations classified outside general government in 2021 varied widely across the EU Member States. Significant amounts of liabilities were recorded in Greece (163.0% of GDP), ahead of the Netherlands (99.1%), Germany (94.9%), Luxembourg (73.5%) and France (70.2%).

In contrast, small amounts of public corporation liabilities were recorded in Slovakia (3.6%), followed by Spain (5.6%), Romania (8.3%), Croatia (9.1%), Lithuania (10.0%) and Bulgaria (11.6%).

The main reason for the high level of these liabilities in certain Member States is that the data include government-controlled financial institutions, for example public banks. Most of the banks’ liabilities consist of deposits held by households or other private or public entities. In general, financial institutions report high amounts of debt liabilities and have, at the same time, a significant level of assets which are not captured in this data collection.

Source: Cyprus News Agency

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The journey of digital transformation has begun, Deputy Minister of Research says

The journey of digital transformation has begun, Deputy Minister of Research, Innovation and Digital Policy, Kyriacos Kokkinos, said on Tuesday.

Kokkinos was speaking during the presentation of the work of the Deputy Ministry, in Nicosia.

Initially, Kokkinos referred to the establishment and development of gov.cy as a single point of contact for citizens with the public sector and the implementation of a fully digital management system of the pandemic. He also said that “we are building the Gigabit society” and that “we have supported the expansion and development of the Research and Innovation ecosystem”.

“We put the citizen at the heart of the matter, since we collaborate in the design of the websites with citizens who are potential users of the services that will be digitised. The work is done by the citizens for the citizens,” he pointed out.

The Deputy Minister spoke of Cyprus rising by 4 places in the DESI index in 2022, adding that it is now in 20th place, having started from 25th place. The greatest weakness of Cyprus, he indicated, is in human capital, that is to say, he explained, we do not have enough specialised professionals in the field. “This challenge must be seen positively as a career opportunity for our young people who want to enter this field,” he noted.

He also said that on the European Innovation Scoreboard “miracles have been achieved”, since Cyprus is in the first 10 positions as the only country from Southern Europe and the first in terms of progress, which is a “tremendous achievement”.

Kokkinos also referred to the new government portal www.gov.cy, which includes more than 350 digital services and was created based on the standards and procedures of the Digital Services Factory. “This reform in 2-3 years will have a huge impact on our society,” he underlined, adding that www.gov.cy is “easy to use and friendly”.

“The journey of digital transformation has begun. This journey has no end, but intermediate goals and we are moving forward”, the Deputy Minister pointed out.

He also spoke about the National Research and Innovation System, which consists of more than 400 start-ups and innovative companies, more than 2,000 researchers, 8 research institutes, 10 universities and 7 centres of excellence. He made special reference to the PHAETHON centre of excellence, which concerns innovation in the field of energy. “Of the 35 centres of excellence in Europe, 7 are from Cyprus,” he said, noting that each centre employs around 100 people.

The National Programme Framework amounts to €150 million for the years 2021-2027, Kokkinos said. Innovation accounts for €34 million, internationalisation €35 million, research €30 million, structure and capacity building €17 million, and cooperation and knowledge transfer €34 million.

In total, in the last 3 years, the Deputy Minister emphasised, €30 million were given to start-ups and scale-ups through the financing programmes of the Research and Innovation Foundation, resulting to €15 million that came from leveraging private capital, more than 240 new job positions, as well as 104 companies that received funding.

This year’s budget of the Deputy Ministry of Research amounts to approximately €120 million, while next year it will be around €157 million, said Kokkinos. He also noted that in the “Cyprus Tomorrow” plan, 23% of the Recovery and Resilience Plan is dedicated to digital transformation projects, i.e. approximately €282 million plus another €150 million from national resources, plus €80 million for business innovation.

Asked about the lack of human capital in the field, the Deputy Minister replied that based on European indicators, the country is below the European average “by a lot”. While in Europe 3.9% of university graduates are active in the field of sciences, in Cyprus the percentage is 2.7%, he explained.

Replying to another question, Kokkinos expressed the desire for Cyprus to rise by 3-4 places in the DESI index this year, i.e. to be in places 15-16. “We know where we are going, it just takes persistence and patience,” he pointed out.

Source: Cyprus News Agency

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Household debt at 77% of GDP, that of corporate at 150% at the end of September, CBC data show

The household debt ratio stood at 77% of Gross Domestic Product (GDP) at the end of September 2022, marking a slight decrease compared to the previous quarter, due to the increase in GDP, according to data published by the Central Bank of Cyprus on its website on Tuesday, in the “Quarterly Financial Accounts” edition, for the reporting quarter ending September 2022. Over the same period, the debt ratio for non-financial corporations stood at 150% of GDP.

The assets of households in financial instruments amounted to 58.6 billion euros at the end of September 2022, of which 61% concerns cash, deposits and loans, 2% concerns securities, 20% shares and 18% other financial instruments. Their debt at the end of September 2022 stood at €20.1 billion with the relative debt ratio standing at 77% of Gross Domestic Product (GDP), showing a slight decrease compared to the previous quarter due to GDP growth.

The CBC notes that, compared to December 2016, the household debt index shows a noticeable decrease of 39%.

The corresponding assets of non-financial corporations amounted to 66.6 billion euros with a ratio of 18% in cash and deposits, 4% in loans, 0.3% in securities, 47% in shares and 31% in other financial assets. The sector’s debt at the end of September 2022 stood at €39.3 billion with the debt ratio at 150% of GDP, down 8% from the previous quarter, mainly due to GDP growth. Compared to December 2016, the debt index of non-financial corporations shows a noticeable decrease, reaching 61%.

In addition, the assets of insurance corporations in terms of purely financial instruments amounted to 4.3 billion euros, of which 12% in cash and deposits, 3% in loans, 22% in securities, 46% in shares and 18% in other financial data.

Accordingly, investment funds have assets in financial instruments of 7.7 billion euros invested 5% in cash and deposits, 13% in loans and securities, 79% in shares and 2% in other financial assets.

Investments in financial instruments of pension funds amounted to 3.8 billion euros and mainly concern cash and deposits at a rate of 24%, 16% in loans, 3% in bonds, 44% in shares and 13% in other financial assets.

Source: Cyprus News Agency

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The index of industrial output prices recorded an annual increase of 22.4% in 2022

The Index of Industrial Output Prices showed an increase of 22.4% for the period January-December 2022, compared to the corresponding period of 2021, according to data published by the Statistical Services on Tuesday.

For December 2022 the index reached 138.6 units (base 2015=100), recording an increase of 0.3% compared to November 2022. Compared to the corresponding month of the previous year, the index recorded an increase of 18.7%.

In December 2022 compared to November 2022, the index remained stable in the sectors of mining and quarrying and electricity supply, while it showed a rise in the sector of manufacturing by 0.4%. In the sector of water supply and materials recovery the index recorded a decrease of 1%.

Compared to the corresponding month of the previous year, an increase was recorded in all sectors. Electricity supply increased by 40.1%, mining and quarrying by 14.3%, manufacturing by 12.6% and water supply and materials recovery by 4.9%.

By division of economic activity in manufacturing, in December 2022 compared to the corresponding month of the previous year, increases were recorded in all economic activities. The most significant ones were observed in the manufacture of other non-metallic mineral products, which increased by 19.8%, the manufacture of food products and beverages by 14.6%, the manufacture of wood and products of wood and cork, except furniture, by 13.2%, the manufacture of paper and paper products and printing by 12.4%, the manufacture of basic metals and fabricated metal products by 12.4% and the manufacture of rubber and plastic products, which increased by 9.6%.

Source: Cyprus News Agency

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Single Market turns 30: Commission’s reports confirm the Single Market underpins Europe’s ability to tackle key challenges

Today, the Commission has published the 2023 Annual Single Market Report and the 2022 Single Market Scoreboard, as part of activities to mark the 30th anniversary of the Single Market. The reports confirm that the Single Market remains a key tool to address Europe’s current challenges and highlight the importance of continuously improving its functioning, as well as highlighting the Single Market’s impact in terms of increased added value for the EU’s economy.

Both reports will provide input for discussions with Member States on strengthening the Single Market and will inform the Commission’s future work to ensure the Single market meets its full potential in supporting the resilience and competitiveness of the European economy.

The 2023 Annual Single Market Report (ASMR) takes stock of the integration of the Single Market and analyses how it helps Europe to navigate current geopolitical tensions, improve EU competitiveness and support the green and digital transitions of our economy.

The 2022 Single Market Scoreboard shows how the Single Market benefits the EU economy. It provides a detailed overview of how EU Single Market rules were applied across the European Economic Area, with the objective of identifying improvements for the Single Market. The Scoreboard focuses on the progress made in implementing EU law, overall business conditions, integration of the Single Market and other major policy goals like growth and jobs, resilience, digital and green economy.

The key findings of the reports are that:

• A strong Single Market underpins Europe’s ability to tackle key challenges: The 2023 Annual Single Market Report focuses on the need to leverage the power of the Single Market to ensure the availability of critical goods, services, skills, and capital needed for Europe’s twin transitions. It finds that progress is needed in boosting the resilience of supply chains, addressing strategic dependencies, especially for critical raw materials, improving integration in the services market, and ensuring Europe has the technologies and skills to tackle these challenges. The Single Market Scoreboard provides additional evidence on results achieved so far in terms of competitiveness, trade, economic resilience and twin transitions, pointing to areas for possible improvements. These include, for instance, reducing barriers to exercising professions (e.g. legal services) or recognise professional qualifications (e.g. tourist guides) across borders, improving public and private investments, supporting SMEs and pursuing national efforts in support of the twin transitions.

• Strong potential of digital tools and data to improve governance of the Single Market: this year’s Annual Single Market Report highlights how novel approaches, including better use of digital technology and e-government solutions – like, among other the Single Digital Gateway and the Once Only Technical System (OOTS) – will lead to better trust among authorities and reduce the burden for businesses and administrations.

• Single Market brings growing added value to the EU economy: Both the Annual Single Market Report and the Single Market Scoreboard assess the benefits and increased trade between Member States enabled by the Single Market since its creation. The Scoreboard shows growing trade integration after the COVID-19 pandemic: in June 2022 trade within the EU represented 60% of overall EU trade.

• Businesses benefit from better enforcement of rules and general conditions, but difficulties remain: The Scoreboard establishes that the implementation and enforcement of Single Market rules are improving; this is reflected in fewer infringement proceedings against Member States in 2021, a first in 4 years. The Scoreboard also shows better use and application of several essential Single Market tools like the Internal Market Information System, the Single Market Transparency Directive, as well as increased use of the SOLVIT network, which helps prevent or remove obstacles in the Single Market. In addition, businesses across most Member States perceived regulatory burdens to have decreased in 2021 but face increasingly issues around late payments by public authorities, especially due to the impact of the COVID-19 pandemic.

Background

The annual reports prepare the ground by providing background analyses for the Communication “The Single Market at 30”, which will be published by the Commission in the coming weeks.

The Annual Single Market Report was first published accompanying the Update of the Industrial Strategy in May 2021. This analysed the state of play of the European economy and evaluated progress made in delivering the 2020 European Industrial Strategy . Today, the Commission is publishing the third edition of the Annual Single Market Report, which also commemorates the 30th anniversary of the Single Market.

The Single Market Scoreboard was first published in 1997. The 2022 edition of the Single Market Scoreboard includes – next to traditional indicators – new business environment indicators regarding administrative responsiveness and burden of regulation, as well as information on access to services and services markets, labour mobility and access to finance. It also reports on results achieved by the Single Market in terms of growth, employment and social indicators, integration of goods and services, economic resilience, digital and green transitions.

Source: Cyprus News Agency

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Eurozone and EU GDP stable at 4Q 2022, Eurostat preliminary estimate shows

In the fourth quarter of 2022, seasonally adjusted GDP increased by 0.1% in the euro area and remained stable in the EU, compared with the previous quarter, according to a preliminary flash estimate published by Eurostat, the statistical office of the European Union, on Tuesday.

In the third quarter of 2022, GDP had grown by 0.3% in both the euro area and in the EU.

According to a first estimation of annual growth for 2022, based on seasonally and calendar adjusted quarterly data, GDP increased by 3.5% in the euro area and by 3.6% in the EU.

These preliminary GDP flash estimates are based on data sources that are incomplete and subject to further revisions.

Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 1.9% in the euro area and by 1.8% in the EU in the fourth quarter of 2022, after +2.3% in the euro area and +2.5% in the EU in the previous quarter.

Among the Member States for which data are available for the fourth quarter of 2022, Ireland (+3.5%) recorded the highest increase compared to the previous quarter, followed by Latvia (+0.3%), Spain and Portugal (both +0.2%).

The highest declines were recorded in Lithuania (1.7%) as well as in Austria (0.7%) and Sweden (0.6%).

The year-on-year growth rates were positive for all countries except for Sweden (-0.6%) and Lithuania (-0.4%).

There are no available data for Cyprus. The preliminary flash estimate of the fourth quarter of 2022 GDP growth presented by Eurostat is based on the data of 18 Member States, covering 96% of euro area GDP and 94% of EU GDP. The next estimates for the fourth quarter of 2022 will be released on 14 February 2023.

Source: Cyprus News Agency

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Ministry of Health issues health protocol against spread of COVID-19 during Sunday’s presidential elections

The Ministry of Health issued Monday a press release on a series of protection measures for the prevention of the spread of COVID-19 that should be implemented by the election officers during the presidential elections that will take place on Sunday.

Among other things, it is recommended that the rooms are adequately ventilated, while employees and representatives of the candidates must wear a protective mask throughout their stay at the polling station.

The use of protective mask is recommended to all voters inside the polling stations. It is also noted that the voting booths will not have a curtain and it will be the responsibility of the staff of the polling station to regularly disinfect them, as well as all the surfaces that voters and the staff come in contact, including pens.

It is mandatory, it says, that voters disinfect their hands upon entering and exiting the polling stations.

As regards staff hygiene, it is stated that it is recommended that all employees of the election centers and the representatives of the candidates, carry out a rapid antigen test (self test) for the disease of COVID-19 the day before the elections.

Furthermore, it says that persons who are in confinement after testing positive for the COVID-19 disease, and are registered in the electoral roll, on the day of the elections, are granted permission to go exclusively to the electoral center where they are registered, in order to exercise their right to vote. It is added that they can go to the polling station either on foot or by private car without any other stops. It is noted that the use of public transport is prohibited and that they must necessarily wear a protective mask.

The personnel that will be working during the election must be trained as regards personal protection precautions and rules. In addition, it says that staff showing symptoms of COVID-19 should refrain from work and contact their personal physician immediately by phone. If symptoms occur during work, the person should leave immediately but may exercise their right to vote before leaving.

During the election process, it should be ensured that the access to the polling centers is conducted without crowds gathering and that polling booths and equipment necessary for the elections are disinfected at regular intervals.

Finally, it says that at the end of the election process, the rooms used as election centers should be naturally ventilated for at least half an hour and disinfected.

Source: Cyprus News Agency