The Central Bank of Cyprus (CBC) has released its latest report on the interest rates offered by credit institutions across the country for July 2024, shedding light on the economic landscape in a period marked by evolving global financial conditions. With interest rates playing a critical role in shaping the borrowing and investment behaviour of businesses and individuals, these figures offer valuable insights into the health of the Cypriot economy.

According to the CBC’s data, interest rates on deposits remained relatively stable compared to previous months. The interest rate for new deposits with a maturity of up to one year held at an average of 0.82%, while overnight deposits for households saw a marginal decline, reaching 0.04%. This slight decrease in overnight deposit rates reflects the broader market’s conservative approach to short-term liquidity, a common trend as economic uncertainty continues to weigh on the eurozone.

For businesses, the rates on overnight deposits remained flat, standing at 0.00%, underscoring the low-yield environment that has persisted for much of the year. This pattern aligns with European Central Bank (ECB) policies, which have kept interest rates subdued to manage inflationary pressures while stimulating investment. As a result, businesses and investors are navigating a challenging environment where low interest rates offer limited returns on traditional savings, potentially pushing them toward riskier, higher-yield investments.

On the lending side, the CBC’s report highlights a slight increase in interest rates for new loans. The interest rate for loans to households for consumer credit increased to 5.80%, up from the previous month’s figure of 5.69%. Meanwhile, loans for house purchases were offered at an average rate of 4.34%, a modest rise compared to June. This uptick, while not dramatic, signals potential concerns around inflationary trends and the cost of borrowing for households.

For businesses, the lending environment remained dynamic, with rates for loans up to €1 million rising to 5.74%. This upward movement reflects broader economic shifts, as businesses face higher borrowing costs in the wake of inflation and tightening global financial conditions.

 Chief Scientist Demetris Skourides participated in a recent Invest Cyprus event in New Delhi, India, aimed at promoting Cyprus as an emerging technology and innovation hub, as well as a reliable gateway for investments to and from Europe.

According to a press release, the 5 September meeting was also attended by the Deputy Minister for Research, Innovation and Digital Policy,  Nicodemos Damianou, the High Commissioner of the Republic of Cyprus to India, Evagoras Vryonides, the CEO of Invest Cyprus, Marios Tannousis, the executives of PWC, Chrysilios Pelekanos, and Eurobank, Panayiotis Chrystostomou, as well as several entrepreneurs and potential investors from India.

Skourides had the opportunity to present the research, technology and innovation ecosystem of Cyprus, to highlight the incentives provided to attract investment and talent to the country, as well as the efforts made by the state to make Cyprus a hub for research, innovation and international entrepreneurship, stressing that Cyprus presents high levels of scientific excellence, as it has a remarkable research potential with significant achievements both at national and European level.

He also emphasised the notable research infrastructure of the Centres of Excellence that have been developed in Cyprus with co-funding by the European Commission, the services they provide and the important role they play in the development of the ecosystem, as well as the opportunities presented for the internationalisation of their services through new partnerships and investments from countries such as India.

It is added that Skourides held talks with over 30 stakeholders and provided a thorough briefing on the benefits of cooperation between entities from Cyprus and India, tax incentives, the funding programmes of the Research and Innovation Foundation which can be exploited, as well as the opportunities for access to the single European market from the country.

During his meetings, he identified and provided specific opportunities for cooperation with innovative companies in Cyprus, specialized in Fintech, Regtech, Healthtech, Agrofood and ICT, areas that are highlighted in the country’s Smart Specialization Strategy and are priorities of the Research and Innovation Strategy 2024, it is added.

It is also noted that the Director General of the Cyprus Research & Innovation Foundation, Theodoros Loukaides, also travelled to New Delhi to participate in the one-day CII India-Mediterranean Business Conclave, organised by the Ministry of External Affairs of India and the Confederation of Indian Industry (CII), with the participation of representatives from 28 countries. At the same time, the Deputy Minister of Research, Innovation and Digital Policy led the Cypriot representation.

As Cyprus navigates its energy transition and the challenges posed by the geopolitical landscape, recent consultations conducted by the Cyprus Hydrocarbons Company (CHC) have provided a constructive platform for dialogue. The energy sector remains a pivotal driver of the country’s economy, with the latest discussions centred around maximising the potential of its hydrocarbon reserves while integrating greener, sustainable solutions.

General Secretary of the General Confederation of Greek Workers of Cyprus (GSI), Andreas Matsas, commended the efforts made during the consultation process. The talks focused on the country’s energy future, have been described as constructive, though Matsas acknowledged that much remains to be done. His statement highlighted the importance of fostering a national conversation that considers both the economic benefits of exploiting hydrocarbon resources and the long-term sustainability goals aligned with global climate initiatives.

The consultations come at a critical juncture for Cyprus, as it seeks to balance its burgeoning energy sector with European Union (EU) commitments to reduce carbon emissions. The CHC’s approach has been to encourage collaboration between industry stakeholders, policymakers, and local communities, ensuring that all perspectives are taken into account as the nation’s energy policies evolve.

Matsas further noted that the dialogue’s value lies in its ability to bring clarity to complex issues such as resource management, investment in infrastructure, and the need to diversify Cyprus’s energy mix. While the country’s natural gas reserves offer significant economic opportunities, there is also an urgent need to consider renewable energy alternatives and energy security, especially in light of recent regional tensions and the evolving global energy landscape.

Although much of the focus remains on the exploitation of hydrocarbons, the broader discussion on integrating renewable energy sources is gaining momentum. The government’s commitment to pursuing solar and wind energy investments is a step in the right direction, according to industry experts. Still, Matsas highlighted the necessity of maintaining an open, transparent dialogue to ensure that the nation’s energy strategies align with both local and international interests.

The continuing consultation process represents a step forward in the country’s broader energy ambitions. However, Matsas emphasised that this is merely the beginning, urging stakeholders to remain committed to ensuring that the energy sector develops in a way that benefits the country economically and environmentally.