In a bid to tackle economic challenges, Cyprus has ratified ‘Vision 2035,’ aiming to boost birth rates, transition to green practices, improve competitiveness, innovate pension systems, and enhance housing solutions. Spearheaded by President Takis Clerides and Andreas Assiotis, this strategic plan emphasizes the need for sustainable economic development with a robust monitoring mechanism in place.
What is ‘Vision 2035’ and how does it aim to address Cyprus’s economic challenges?
‘Vision 2035’ is a strategic plan ratified by Cyprus to reform and sustain economic development. Key focuses include:
- Counteracting declining birth rates with family-friendly policies.
- Committing to the green transition with a €3.1 billion investment by 2030.
- Improving business competitiveness via support for mergers and acquisitions.
- Innovating pension systems and housing solutions.
- Mitigating risks like cybersecurity, migration, and climate change.
Vision 2035: A Sustainable Future for Cyprus
The Cyprus Economy and Competitiveness Council (Soak), under the leadership of president Takis Clerides, has spotlighted the need for a strategic update to ‘Vision 2035’—the long-range plan for Cyprus’s sustainable economic development. This strategy, which started to take shape in 2020 and was ratified by the Cabinet in 2022, aims to reform and restructure the economic foundations of Cyprus towards sustainability. Notably, the plan is reviewed every five years, ensuring it remains relevant and effective.
A robust monitoring mechanism is in place to track the plan’s progress, with several of its provisions already included in the National Recovery and Resilience Plan. Andreas Assiotis, the council vice president, reflected on the strategy’s goal to establish Cyprus as a top global destination for living, working, and business. To achieve this, the plan includes a comprehensive set of actions and reforms that touch on various economic and social aspects.
Addressing Demographic Challenges
A key concern for the Soak is the island’s declining birth rates. Council member Pavlos Photiades emphasized that demographics play a crucial role in shaping a nation’s future economic competitive edge. With birth rates across Europe—and in Cyprus (1.39 percent)—falling below the population replacement level, the impact on the economy and society is profound.
In response, the council recommends a suite of measures including family-friendly policies, incentives for larger families, educational subsidies, and tax benefits for employers who support family-oriented workplaces. These proposals echo successful initiatives seen elsewhere in Europe. Nevertheless, Photiades underlines the necessity for a detailed study to devise a comprehensive strategy specifically targeting the birth rate issue.
Paving the Way for the Green Transition
The EU’s commitment to climate neutrality by 2050 sets an ambitious benchmark for member states, including Cyprus. Tasos Anastasiou introduced a range of recommendations during the press conference, advocating for a dedicated Deputy Ministry for Climate and Environment to oversee and prioritize necessary actions for the green transition.
Anastasiou pointed out the significance of having a broad perspective to manage and allocate budgets effectively, utilizing funds from green taxes. With an estimated €3.1 billion investment needed by 2030, the financial implications are not insignificant. However, the potential for job creation, technological innovation, and climate change mitigation are substantial long-term benefits that Cyprus aims to harness.
Enhancing Competitiveness through Business Reforms
Improving the country’s business competitiveness is also on the Soak’s agenda. Andreas Assiotis proposed a set of recommendations for fostering mergers and acquisitions. By creating a supportive framework and altering the cultural and legal landscape, Cyprus aims to address the fragmentation of its economy, which is marked by a high number of very small businesses—including so-called ‘financial zombies’—that struggle to achieve economies of scale.
These measures seek to facilitate synergies and create a more robust, competitive business environment, particularly within the agricultural sector and among small to medium-sized enterprises (SMEs), which serve as the backbone of the island’s economy.
Innovative Solutions for Housing and Pensions
The council’s discussion also ventured into the realms of the pension system and affordable housing. Evangelos Tryfonos presented a series of recommendations aimed at bolstering the pension system and preventing future issues. The suggestions included automatic enrollment in professional pension funds for private-sector workers, reduced employer contributions, and enhanced state support for low-income employees.
In housing, the call was made for a unified policy body, utilization of state land for public housing projects, and increased capital for the Cyprus Land Development Corporation (Koag). These initiatives are envisioned to collaborate with technical experts to deliver cost-effective, high-quality housing solutions.
Understanding and Mitigating Risks
A comprehensive risk assessment by the council has identified key threats to Cyprus’s economic stability, with cybersecurity, mass migration, and deteriorating climate conditions at the forefront. Addressing these risks will be pivotal in ensuring the successful implementation of the Vision 2035 strategy and safeguarding the island’s future prosperity.
What is ‘Vision 2035’ and how does it aim to address Cyprus’s economic challenges?
‘Vision 2035’ is a strategic plan ratified by Cyprus to reform and sustain economic development. Key focuses include:
– Counteracting declining birth rates with family-friendly policies.
– Committing to the green transition with a €3.1 billion investment by 2030.
– Improving business competitiveness via support for mergers and acquisitions.
– Innovating pension systems and housing solutions.
– Mitigating risks like cybersecurity, migration, and climate change.
What measures are being proposed to address Cyprus’s declining birth rates?
To address declining birth rates, Cyprus is considering implementing family-friendly policies, incentives for larger families, educational subsidies, and tax benefits for employers who support family-oriented workplaces. A detailed study is also recommended to devise a comprehensive strategy specifically targeting the birth rate issue.
How is Cyprus planning to transition to green practices and what financial implications does this transition entail?
Cyprus aims to transition to green practices by creating a dedicated Deputy Ministry for Climate and Environment to oversee necessary actions. An estimated €3.1 billion investment is needed by 2030 to support this transition. The financial implications are significant, but the potential benefits include job creation, technological innovation, and climate change mitigation.
How does Cyprus plan to enhance its competitiveness through business reforms?
Cyprus intends to enhance its competitiveness through business reforms by fostering mergers and acquisitions. This involves creating a supportive framework and altering the cultural and legal landscape to address the fragmentation of the economy, particularly within sectors like agriculture and small to medium-sized enterprises.
