Cyprus as an International Business and Financial Centre

Cyprus is the third largest island in the Mediterranean Sea, situated at the crossroads of three continents and in the trading paths of the first merchants of antiquity. Cyprus’ significant geographic location has been a major factor in shaping its history.

The island’s strategic location, in conjunction with its agricultural and mineral wealth, rendered it a transit trade centre in the region. These were the main reasons that attracted various conquerors, who managed to control the main trade routes of the time by having the island under their rule.

After having experienced a lot of conquerors, Cyprus finally gained its independence in 1960 and was declared an independent State.

The dynamism of the Cyprus economy

Cyprus’ economy is market-oriented, with the private sector playing the dominant role in the production sphere. The government’s role focuses on the creation of a favourable entrepreneurial climate, through the maintenance of conditions of macroeconomic stability, the upgrading of socio-economic and legal infrastructure, and the pursuit of sustainable development.

Some of the accomplishments are the following:

• An impressive real annual rate of growth of GDP.
• The rapid growth of GDP accompanied by the creation of a large number of employment opportunities and the consolidation of conditions of full employment.
• The satisfactory growth performance accompanied by conditions of relative internal and external economic stability.
• The rapid rate of growth was accompanied by a profound restructuring of the economy from the sectoral point of view.

The International Monetary Fund evaluates the Cyprus economy

The Executive Board of the International Monetary Fund (IMF) mentions with regard to the situation of the Cyprus economy, in its report on 31 January 2003, that “over the last two decades economic performance has been impressive, with GDP per capita rapidly approaching the average level in EU countries. Strong growth has kept the unemployment rate below 4% for the past two decades, inflation has remained under control, and the fiscal deficit has averaged below 3.5% of GDP during the past decade”.

Furthermore, the IMF Executive Directors welcomed “the substantial progress achieved on the reform agenda, including the abolition of the interest rate ceiling; the granting of legal independence to the central bank; continuing capital account liberalization; and the reform of the tax system”, adding that “these achievements have helped pave the way for European Union membership in 2004”.