The Minister of Finance believes that positive effects will soon occur across the entire spectrum of the Cypriot economy

• Even if cautiously, the Minister of Finance sees a gradual deceleration of inflation

• Significant, he says, is the euphoria that has manifested in the markets

• M. Keravnos expects a reduction in energy costs and a positive impact on the economy very shortly

Makis Keravnos, Minister of Finance, in his first reaction after the publication of the principle agreement between the US and Iran and, speaking to Brief, captures, albeit conservatively, his initial estimates regarding the positive effects that the Cypriot economy will experience.

He notes that the announcement of reaching an agreement to end a war that shook the global economy, "justifiably creates optimism" in the international community and in Cyprus.

"No one can dispute that the news of an end to the crisis in the M. East fuels hopes," the Minister of Finance observes.

He points out that the positive effects on the Cypriot economy will become clearly visible when normality returns to the global economy and particularly to the countries that are leaders.

"The markets have already absorbed the climate of euphoria being created from day one," noted Mr. Keravnos.

He expressed the wish that, next Friday, the principle arrangement to lift the military conflict between the US and Iran is put into practice with the conclusion of the agreement.

M. Keravnos, given that the agreement will be respected by both sides, sees that there will be a reduction in energy costs, as international crude oil prices "have recorded a spectacular drop since the very first day."

"I estimate that the energy crisis will soon be a thing of the past and there will be a positive impact on consumers, who for quite some time now have been feeling the pressures on their wallets," he adds.

Responding to a relevant question, Mr. Keravnos estimated that the deceleration of inflation is a sine qua non, from the moment there is a reduction in energy costs.

He formulated the position that the upcoming reduction in energy costs will improve the competitiveness of the Cypriot economy and will maintain or may even increase the growth rate, which is among the highest in Europe.

He also estimates that, with the normalization of the geopolitical crisis, there will also be a realignment in spending for the development of the domestic market.

He expressed reservations as to whether there will be significant reductions in the prices of goods due to the reduction of energy costs, despite the fact that he himself would find it unjustified if there were no reduction in the monthly cost of the housewife's basket.

"I am certain that we will see a containment of prices and not their appreciation," he observed.

He also stood on the need to continue fiscal discipline, pointing out that no one should be carried away by the euphoria created by the termination of the war.

"The problem of inelastic expenditures is here. And our efforts to rationalize expenditures, also on the basis of the fiscal ceilings set by the EU, must continue," he stressed.

Particularly for the tourism industry, which was also the first "victim" of the war in Iran, Makis Keravnos mentioned that over the last few weeks, some recovery is being observed in the tourism industry.

It is his estimate that, with the termination of the war and the return of normality to the global and European economy, where Cyprus's largest tourist markets are located, momentum will exist.

The Minister of Finance hopes that the next five months will have the momentum of the previous two record years for tourism, covering the lost ground of arrivals during the months of March and April.

"We monitor the issue of the tourism industry month by month and act accordingly," he noted.

Source: Brief