Rating Agency Capital Intelligence Ratings (CI) has upgraded Cyprus’ Long-Term Foreign Currency Rating (LT FCR) and Short-Term FCR (ST FCR) to ‘BBB’ and ‘A2’, respectively, from ‘BBB-’ and ‘A3’, maintaining a positive outlook.

The Limassol-based regional rating agency cites the continued improvement in the island’s public finances, persistent budget surpluses and rapid decline of public debt.

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“The upgrade reflects the continued improvement in the public finances, including persistent budget surpluses and a rapid decline in general government debt, with the debt to GDP ratio projected to drop below 60% in 2026,” CI ratings said.

According to the agency, the government continues to manage its debt maturity profile in order to reduce refinancing risks while maintaining an increasing cash buffer to counter short-term shocks and external adversities.

“The upgrade takes into consideration the significant decline in macro-financial imbalances, with the size of the banking sector declining to around 200% of GDP, and the cumulative debt overhang in the non-financial corporate and household sectors halving in recent years,” CI added.

The agency also highlighted “the demonstrated resilience of the Cypriot economy against increasing geopolitical risk factors, as well as the significant progress made in strengthening bank balance sheets by clearing up non-performing loans (NPLs) and reducing reliance on wholesale and cross-border funding.”

“As a result, government contingent liabilities from the banking sector have declined markedly in recent years,” CI said.

Furthermore, CI views that the targets outlined in the government’s medium-term debt strategy for 2024-26 are attainable and continue to ensure debt sustainability.

According to the agency, the general government budget performance remained very strong in the first seven months of 2024, with the budget position (on a cash basis) posting a higher than projected overall surplus of 2.2% of GDP (compared to 1.2% in 2023).

“As a result, CI expects the general government budget position to post a surplus of 2.9% of GDP in 2024, despite the adjustment of public sector wages,” the agency said.

Noting that short-term refinancing risks continue to decline, CI said that this is due to the government’s sound fiscal management, favourable debt maturity structure, and low gross financing needs (3.7% of GDP in 2024), as well as the prudent building of cash buffers of almost 10% of GDP that cover over 200% of gross financing needs for at least the next 12 months.”

In a sobering revelation, nearly 14% of the population in Cyprus is living in households at risk of poverty in 2023, according to the latest report from the Statistical Service of Cyprus. The findings indicate a persistent challenge for the nation, where a significant proportion of citizens face financial hardship, with household income levels falling below the poverty threshold.

The poverty risk threshold is defined as 60% of the national median disposable household income, adjusted for household size. For 2023, this equates to an annual income of €10,011 for a single adult and €21,024 for a household comprising two adults and two children under 14. The report highlights that a considerable number of Cypriot households are struggling to meet these income benchmarks, exacerbating concerns about economic inequality and social welfare in the country.

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The Complexity of Poverty in Cyprus

The situation is more nuanced than simple income statistics suggest. A range of factors, including the cost of living, inflation, and access to social services, play crucial roles in determining the risk of poverty. With the rise in inflation seen across Europe, Cyprus has experienced higher living costs, particularly in housing, food, and energy. These increases have further strained household budgets, particularly for low- and middle-income families, many of whom already teeter on the edge of financial insecurity.

Although the Cypriot economy has shown resilience in recent years, driven by sectors such as tourism and real estate, the benefits of economic growth have not been evenly distributed. Many households remain vulnerable, with limited financial reserves and increasing debts. Furthermore, long-standing issues such as unemployment and underemployment, especially among young people and women, contribute to the ongoing risk of poverty.

Government Initiatives and the Path Forward

The Cypriot government has implemented several measures aimed at alleviating poverty and promoting social inclusion. These include targeted welfare programmes, subsidies for low-income families, and initiatives aimed at improving employment prospects through education and vocational training. However, despite these efforts, the persistence of poverty suggests that more comprehensive approaches may be required to address structural economic inequalities.

Addressing the root causes of poverty will likely require multifaceted solutions, including further support for affordable housing, healthcare, and child services. Additionally, ensuring that wages keep pace with inflation and cost of living increases will be critical to improving financial stability for vulnerable populations.

Junior Achievement Cyprus (JA Cyprus), a prominent non-profit organisation that promotes entrepreneurship among young people, has announced the opening of applications for its flagship entrepreneurship programmes for the academic year 2024-2025. Aimed at fostering business acumen, innovation, and leadership skills among students, these initiatives offer invaluable hands-on experience in building and managing a business from the ground up.

The organisation’s two primary programmes—the “Company Programme” and the “StartUp Programme”—are designed to equip students with the skills necessary to thrive in the competitive global economy. Both initiatives aim to bridge the gap between theoretical learning and practical business application, encouraging students to think creatively and act decisively in real-world scenarios. The programmes are open to students from public and private secondary schools, as well as universities across Cyprus.

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Fostering Entrepreneurship from a Young Age

The “Company Programme” targets secondary school students, providing them with the opportunity to form a real company and develop their own products or services. This programme has gained international recognition, having been implemented across over 40 countries. Students are mentored by experienced business leaders and educators, who guide them through the complexities of entrepreneurship, from ideation to execution. Participants not only learn how to develop a business plan but also how to pitch their ideas to potential investors, handle financials, and navigate the competitive market.

The “StartUp Programme,” on the other hand, is tailored to university students and young professionals. This initiative allows participants to create their own startups, offering a platform to explore innovative solutions to real-world problems. Through this programme, aspiring entrepreneurs receive mentorship, access to business networks, and an opportunity to pitch their projects to investors at both local and international events.

The programmes culminate in local competitions, where teams present their business ideas to a panel of judges composed of industry professionals. Successful teams have the opportunity to compete at the European level, representing Cyprus in the Junior Achievement Europe Competitions. These events not only provide international exposure but also offer students the chance to expand their business networks, gain feedback from experts, and potentially secure funding for their ventures.

The President of the Republic Nikos Christodoulides and the Vice President of Chevron, the managing company of the field, Frank Cassulo, have reaffirmed their support for the development of the “Aphrodite” liquified natural gas field in Cyprus’ EEZ.

According to an announcement by the Presidency, in his statement, Government Spokesman Konstantinos Letymbiotis said that, during his time in New York, President Christodoulides met with a delegation of the US giant, led by the Vice President of the company.

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“The President of the Republic and the Vice President of the company reaffirmed their support for the ‘Aphrodite’ project, a project of strategic importance both for the energy planning of Cyprus, the wider region, but also for the company itself,” Letymbiotis said in his statement.

He also noted that “in the next period, with the road map that has been drawn up through a specific taking of actions and steps, the relevant Ministry of Energy and the Chevron company will proceed to be in close coordination and close cooperation for this strategically important project.”

The meeting with President Christodoulides took place after the joint statement of the Ministry of Energy and the US company, following their meetings in Nicosia, to hold discussions over the next four months “in order to seek a consensual arrangement that ensures the development of the ‘Aphrodite’ field without further delays,” as the Minister of Energy George Papanastasiou had stated.

The consortium that holds the license to develop the field had announced that it had filed an amended development and production plan for ‘Aphrodite’, worth $4 billion, with the Ministry of Energy on 2 September.

In a strategic move to strengthen its presence in the Australian financial market, eToro, a global trading and investment platform, has announced the acquisition of Australian broker Spaceship for AUD 80 million. The deal, which is subject to regulatory approval, marks another significant step in eToro’s ongoing expansion efforts, as it seeks to solidify its position in the competitive landscape of financial technology.

Spaceship, an Australian fintech firm that focuses on superannuation and investment products, has built a reputation for offering simple and accessible investment solutions to a younger demographic. Launched in 2016, the company has aimed to modernise Australia’s investment approach, particularly in the realm of superannuation. Its acquisition by eToro, which boasts a community of over 32 million users globally, reflects a growing trend of consolidation in the fintech sector as major players seek to diversify their portfolios and capture new customer segments.

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Strengthening eToro’s Footprint in Australia

For eToro, this acquisition is not just about geographical expansion but also about gaining access to new markets and tapping into the unique superannuation market, which is estimated to be worth over AUD 3.5 trillion. By acquiring Spaceship, eToro is positioning itself to offer a broader range of financial services in a country where the demand for self-directed investment options is rapidly increasing.

Yoni Assia, CEO of eToro, remarked on the acquisition as a move that underscores the company’s commitment to providing diverse financial products and services to meet the evolving needs of investors worldwide. “This acquisition is aligned with our vision to empower people to grow their knowledge and wealth,” Assia stated, indicating that Spaceship’s integration would enable eToro to offer enhanced investment tools and products tailored to Australian investors.

The acquisition of Spaceship also signals a broader trend of consolidation within the fintech sector, where established firms are acquiring smaller players to scale their operations and capture market share. For eToro, this acquisition comes on the heels of other strategic moves aimed at broadening its global footprint, including previous partnerships and acquisitions in Europe and the United States.

Liquidity in the Cyprus banking system (the difference between deposits and loans) rose to €28.7 billion in August 2024, driven by the rise in deposits in combination with the reduction in the outstanding balance of loans in the system, data released by the Central Bank of Cyprus (CBC) show.

According to the CBC, total deposits in August 2024 recorded a net increase (excluding the changes resulting from reclassifications, exchange rate and other adjustments) of €288.5 million, compared with a net increase of €164.7 million the month before.

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The annual growth rate of total deposits rose to 3.8%, compared with 2.9% in July 2024. The outstanding amount of total deposits reached €53.6 billion in August 2024, the CBC added.

The rise in deposits was driven by the increase in savings by Cyprus residents, which amounted to €194.2 million. Deposits of households and non-financial corporations increased by €34.6 million and €46.8 million respectively, whereas deposits of the remaining domestic sectors exhibited a total increase οf €112.8 million.

Loans down by €75 million

Total loans in August 2024 recorded a net decrease of €74.9 million, compared with a net decrease of €7.2 million in July 2024.

The annual growth rate (compared with August 2023) stood at 1.7%, compared with 2.0% in July 2024. The outstanding amount of total loans reached €24.9 billion in August 2024.

Loans to Cyprus residents exhibited a decrease of €72.2 million.

Loans to households and non-financial corporations decreased by €25.8 million and €53.6 million respectively. Loans to the remaining domestic sectors exhibited a total increase of €7.2 million, the CBC said.

The remaining domestic sectors include investment funds, other financial intermediaries, financial auxiliaries, captive financial institutions and money lenders, insurance corporations and pension funds and general government.

Cyprus and China are set to sign a bilateral agreement providing for the further liberalisation of flights and strengthening air connectivity between the two countries.

According to a press release issued by the Ministry of Transport, the two countries will on 26 September sign a Memorandum of Understanding and a bilateral agreement providing for the further liberalisation of flights between the two countries.

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The MoU and the agreement will be signed by Han Jun, Deputy Administrator of the Civil Aviation Administration of China (CAAC) and Panagiota Demetriou, Director of the Cypriot Civil Aviation Department, following an authorisation by the Council of Ministers.

“This is a very important agreement which aspires to further improve the air connectivity between the two counties, providing an opportunity to increase the number of travellers both for recreation and business activities,” the Ministry said, adding that “the agreement will contribute to the improvement of flight connectivity and commercial transactions between the countries in the Far East and with Europe as well.”

The signing ceremony will take place at the Civil Aviation Department premises in Nicosia at noon local time.

The readiness of the Republic of Cyprus to address the complex challenges related to migration, always within the framework of international and European law, was highlighted during meetings held in Athens by the Deputy Minister of Migration and International Protection, Nikolas Ioannides.

According to a press release, circulated by the Press and Information Office (PIO) on Wednesday, the Deputy Minister met on September 19 with the Minister of Migration and Asylum, Nikolaos Panagiotopoulos, and the Deputy Minister, Sofia Voultepsi. Also attending the meeting from the Greek side were the General Secretary of Migration Policy, Manos Logothetis, and the Head of the Asylum Service, Marios Kaleas.

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The Cypriot delegation, included the Director-General of the Deputy Ministry of Migration and International Protection, Neofytos Papadopoulos and the Head of the Asylum Service, Andreas Georgiades.

The two delegations examined the recent developments in EU countries and the new challenges arising in relation to migration. They agreed on the need for close cooperation through the operation of technical committees and the signing of a Memorandum of Understanding to ensure better management of shared challenges.

Discussions also focused on the implementation of the provisions of the EU Pact on Migration and Asylum, the Greek model for managing unaccompanied minors, and the need to exploit potential synergies in tackling smuggling networks in collaboration with FRONTEX and other countries. Additionally, they discussed issues related to the management and effective integration of legal migrants.

The press release also said that the Deputy Minister met with the Head of the International Organization for Migration (IOM) in Greece, Sanja Celebic Lukovac, and the former Head of IOM Greece and current Regional Emergency Coordinator, Gianluca Rocco (via teleconference).

The two officials expressed understanding of the challenges and concerns posed by the increased migration flows to Cyprus and recognized that the Republic of Cyprus is a model in voluntary returns, ranking first in the EU in terms of returns relative to its population, the press release says.

The Deputy Minister thanked the IOM officials for their support and determination in managing the multiple challenges and requested their mediation to hold Turkey accountable, particularly regarding the arrival of migrants in the Buffer Zone via Turkey and the occupied areas.

Ioannides also met with the Head of the Greece Sector in the European Commission’s Directorate-General for Migration and Home Affairs, Aristides Psarras. They discussed, among other topics, the re-evaluation of areas in Syria to classify them as safe zones and issues concerning the implementation of the EU Pact on Migration and Asylum.

The press release said that during the meeting, the crucial role of Cyprus in safeguarding the EU’s external borders was highlighted, and the need for practical solidarity among member states was emphasised. Dr. Ioannides pointed out that the Republic of Cyprus looks forward to the support of its partners in protecting the state’s interests, fully respecting the provisions of international and European law.

Minister for Agriculture, Maria Panayiotou, talked about the effects of drought on Cyprus, as well as the measures that the EU can take to support the agricultural sector across Europe, and presented the recent joint statement by the MED9 on the issue, during the Agriculture and Fisheries Council of the EU held in Brussels.

During a discussion on the state of agricultural markets in the EU, Panayiotou referred to the significant impact that a prolonged drought has had on Cyprus, resulting in significantly reduced yields for irrigated and non-irrigated crops, the Ministry of Agriculture, Rural Development and Environment said in a press release on Wednesday.

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The Minister, the press release adds, “pointed out that, due to limited water availability in dams, water supply for agricultural purposes has been reduced by 33.7% for 2024, while the forecasts for the following years are not favourable.”

Panayiotou called on the European Commission to activate the agricultural reserve to provide support to affected farmers, but also to further simplify support measures related to water management under the Common Agricultural Policy.

During the meeting, the Minister also presented the joint statement on the impact of drought on the primary sector, which was issued by the Ministers of Agriculture of the nine Mediterranean EU Member States (MED9) during a recent meeting in Cyprus.

Panayiotou referred specifically to the need for a collective response to this phenomenon that threatens food production and the social fabric of rural areas in the EU and pointed out that the joint statement reflects the practical commitment of the Mediterranean Member States to find solutions that will allow sustainable water management and will be included in EU policies.

According to the press release, the joint communication of the MED9 received the support of other Member States, in addition to the countries that had signed it in Cyprus.

During a working lunch, Professor Peter Strohschneider presented his report on the results of the strategic dialogue on the future of agriculture, which was presented in early September at a joint press conference with European Commission President Ursula von der Leyen.

Panayiotou said she supports the need to further target support for farmers, with a focus on small and medium-sized farms and young farmers, as mentioned in the report. She also stressed the importance of promoting new technologies and innovation in agricultural production.

She also noted that the proposal to create two funds independent of the CAP, such as the fair transition fund and the nature restoration fund, should not limit appropriations which will be available through the next CAP in the future.

The Agriculture Minister said that Cyprus agrees with the proposed reform of the agricultural reserve, pointing out the need for a more flexible crisis management framework that will provide adequate support to farmers and allow for faster and simplified procedures, adapted to local needs and specificities.

The University of Cyprus (UCY) and XM Group signed an agreement on Wednesday to establish the first chair in Artificial Intelligence (AI) at the University’s Department of Computer Science. The agreement was signed at the UCY campus, in Nicosia.

The University notes in a press release that XM Group undertakes the funding of the Chair for 10 consecutive years, to promote research and education and the exploitation of research results in the field of AI. ‘The funding of more than one million euros entails the creation of the Chair and its establishment through the appointment of a Professor,’ the press release adds.

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In his address, Rector, Professor Tasos Christofides, stated that through the XM Chair, the University seeks to leverage the potential of AI, providing the next generation with the necessary skills and knowledge, shaping the new educational and research process both in and beyond the university.

Vice-Rector of Academic Affairs, Professor Eleni-Tatiana Synodinou, presented the objectives, the actions and the prospects through the establishment of the XM Chair.  She also pointed out that the Chair’s activities are expected to add significant value to both partners and generate joint investments for the future of the country and the new generation.

On his part, Chairman of the Council of the University of Cyprus, Tasos Anastasiou in his address indicated that the fact that XM chose the University of Cyprus to establish a Chair in the field of Artificial Intelligence ‘’is a significant vote of confidence’’, adding that ‘’it fills us with pride and creates the right conditions to showcase our potential in cutting-edge technologies.’’

Vice-President and Associate Professor of the Department of Computer Science of the University of Cyprus, Vasos Vasiliou, pointed out that the chair of Artificial Intelligence is the first chair of its kind in the Department, adding that this “is a milestone which marks the further development in our own course.”

Professor of the University’s Department of Computer Science, Elpida Keravnou-Papailiou, pointed out that the signing of the agreement is an excellent development. She went on to say that the Department is looking forward to expanding its cooperation with XM Group, noting that “there are many issues on which we can cooperate.”

Spokesperson of the Ministry of Foreign Affairs, Theodoros Gotsis, expressed the wish of the Ministry of Foreign Affairs to be in contact with the newly established chair of AI so that the Ministry can respond to its tasks with more expertise.

Dr Stavri Morti, co-CEO of the XM Group, noted that “the establishment of the XM Chair in Artificial Intelligence aligns perfectly with our vision of leveraging cutting-edge technology to drive progress and create value.’’ She also expressed her belief that ‘’the research and educational activities stemming from this Chair will not only enrich the academic community but also have a far-reaching impact on society and the economy.’’