Cyprus PIO: News Update in English, 00-05-29

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From: The Republic of Cyprus Press and Information Office Server at <http://www.pio.gov.cy/>

Monday, 29 May 2000

CONTENTS

• [01] Cyprus opens another three chapters for accession negotiations
• [02] New Cyprus Ambassador in Berlin
• [03] New Deputy Attorney General appointed
• [04] US looks forward to the resumption of UN - led Cyprus talks
• [05] Cypriot economy grows at a healthy pace, says IMF

[01] Cyprus opens another three chapters for accession negotiations

The new chapters concern the free movement of persons, cooperation in the fields of Justice and Home Affairs and Financial and Budgetary Provisions. Negotiations on Competition Policy still continue.

Cyprus Permanent Secretary of the Planning Bureau Mr Panicos Pouros informed EU officials on the progress achieved by Cyprus on the three new chapters and returned to the Republic's clear lead in the EU accession negotiations.

[02] New Cyprus Ambassador in Berlin

Receiving the credentials of the new Cyprus' Ambassador to Germany Mr Rau expressed the hope that a just solution to the Cyprus problem will soon be reached.

On his part, Ambassador Psilogenis said Cyprus will do all it can to reach a solution based on the guiding principles and resolutions of the United Nations and seeks a solution that will safeguard the rights of all Cypriot citizens.

[03] New Deputy Attorney General appointed

[04] US looks forward to the resumption of UN - led Cyprus talks

Speaking to the press at the NATO Ministerial meeting in Florence Ms Albright pointed out that "it is very important that the two sides begin to talk with each other about the various aspects of the Cyprus situation".

[05] Cypriot economy grows at a healthy pace, says IMF

Moreover they stress "Per capita income is already above that in some EU members and is approaching the EU average. Despite a moderate increase, unemployment remains far lower than in the rest of Europe, while inflation performance was very good in 1998 and most of 1999. Finally, after registering a large deficit in 1998, mainly due to a number of special factors, the external current account improved considerably in 1999.

However pointing to the outlook for the year 2000 they notice that "although output growth is expected to remain strong and perhaps accelerate this year, its composition is changing: growth is now driven primarily by domestic spending rather than exports of goods and services. Second, the rate of inflation has risen rapidly and is on a clear upward trend: taking into account the planned increase in VAT rates, inflation in 2000 is projected to average 5½ percent, roughly three times the level in the EU. Third, the external current account deficit is expected to increase to about 3½ percent or GDP, despite another record year for tourism. Fourth, although the strong economy should have led to an improvement in public finances, the public deficit and debt are in fact projected to rise in 2000; without additional corrective measures, the fiscal deficit could reach 4½ percent of GDP in 2000. As a result of these developments, Cyprus, which was once well ahead of other EU candidate countries, has now lost the economic advantage and risks falling behind. This is especially worrying since the economy has always been Cyprus's strong card in its bid for EU membership.

The deterioration of these economic indicators is a manifestation of a deeper problem: Cyprus's economy faces the challenges of the 21st century burdened with the rigidities, institutions, and -to some extent- mentalities of the past century. In addition, these challenges have to be met in a new and more demanding international environment.

From the Republic of Cyprus Press and Information Office (PIO) Server at http://www.pio.gov.cy/

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