AGP Executive Report

Banking: Bank of Cyprus will publish nine-month results on November 5, following its acquisition of about €130 million in performing loans and €440 million in deposits from Cyprus Development Bank. Tourism: Arrivals were down 5.6% in the first nine months of 2026, but have recovered from steeper earlier declines. The proposed €59.4 million 2027 budget allocates 62% to promotion and improving the tourism offer. Financial Probe: Police are examining Roman Abramovich’s financial affairs after reports alleging wealth concealment and tax evasion; his lawyers deny wrongdoing. Income Gap: Cyprus’s 2025 income inequality score was 31.2, above the EU average of 29.2, while local earnings data show marked pay gaps across sectors and genders. Business Strategy: Cyprus executives say AI, geopolitical uncertainty and borrowing costs are pushing firms to rethink investment, skills and resilience. At a separate forum, Finance Minister Makis Keravnos called for more flexible EU economic rules while maintaining fiscal stability.

Retail: Lidl Cyprus launched its Lidl Points loyalty scheme on October 22, letting shoppers earn points on every euro spent and redeem them for rewards. Tourism and Hospitality: Leonardo Boutique Hotel Venetian Nicosia opened with 71 rooms, adding a new option for business and leisure travellers in the capital. Aviation: Rising fuel costs could push Cyprus Airways fares higher as the airline expands its fleet and destinations. Corporate Deals: Lordos United completed its €8.16 million acquisition of a stake in P&S Carton. Bank of Cyprus also completed a €570 million loan and deposit acquisition from CDB. Economic Outlook: Cyprus remains among the EU’s strongest economies for post-pandemic growth, but fuel prices jumped 24.6% in September year on year, adding pressure on businesses and households. Innovation: A new €1.5 million grant scheme will support cybersecurity innovation in Cyprus.

Banking: Cyprus banks have renewed warnings about online scams, urging customers to guard personal details and verification codes. Bank of Cyprus has also completed its acquisition of about €570 million in loans and deposits from Cyprus Development Bank. Energy: Egypt is pushing to fast-track a link for Cyprus gas to its infrastructure, supporting exports from the Cronos field and Egypt’s ambition to act as a regional gas hub. Cybersecurity: A new €1.5 million grant scheme offers local businesses up to €100,000 per project to develop and commercialise cybersecurity products and services. Economic outlook: Cyprus recorded 25.8% real GDP growth from 2019 to 2024, among the EU’s strongest performances; public debt fell to 48.5% of GDP. Costs: Fuel prices rose 24.6% year on year in September, while officials said the focus is containing costs rather than promising sharp price cuts.

Prices and household costs: Cyprus fuel prices jumped 24.6% year on year in September, prompting Finance Minister Makis Keravnos to urge caution on expectations of relief. Producer prices also rose 4.2% in August. Growth and public finances: GDP grew 3.3% in the second quarter, while revised figures put 2025 growth at 4.8%. Cyprus also recorded the EU’s steepest quarterly fall in its government-debt ratio. Banking and business: Bank of Cyprus completed its €570 million acquisition of loans and deposits from CDB, while Limassol-based Asbis reported record monthly revenue of $1.05 billion. The Central Bank says a strong labour market reflects the economy’s dynamism. Energy and connectivity: Cyprus has pledged €25 million towards the Greece-Cyprus power cable but has yet to clarify further commitments; completion is now forecast for 2031. Cablenet is investing in next-generation broadband to bring multi-gigabit speeds across the island.

Public Finances: Cyprus recorded the EU’s steepest quarterly drop in government debt, with the ratio falling to 48.5% of GDP in June. Banking: Bank of Cyprus completed its purchase of about €130 million in performing loans and €440 million in deposits from CDB. Household Costs: From November 1, customs will charge €2 to process parcels from outside the EU, on top of the EU’s €3 duty on low-value shipments. Fuel prices rose 24.6% year-on-year in September, though Cyprus had the bloc’s smallest monthly increase. Energy: Egypt and Chevron signed a fiscal framework for developing the Aphrodite gas field and connecting it to Egyptian infrastructure. Business: Limassol-based Asbis reported record September revenue of $1.05 billion, up 216% year-on-year. Tourism: Leonardo Hotels opened its first Nicosia boutique hotel, adding 71 rooms in the capital.

Eastern Mediterranean: Libya’s eastern parliament has approved its 2019 maritime deal with Türkiye, prompting Cyprus to declare it illegal; the dispute adds uncertainty for regional energy and cable projects. Energy: Cyprus’s Great Sea Interconnector costs remain unclear, with the €1.9bn estimate questioned and completion pushed back a year. Cyprus has linked its first €25m payment to Greece issuing a NAVTEX. Cyprus and Egypt have also signed an agreement on the Aphrodite gas field, advancing plans to use Egyptian infrastructure. Economic pulse: Revised figures put Cyprus GDP growth at 3.3% in the second quarter and 4.8% in 2025. Median gross earnings rose 3.8% to €1,953 in 2025, though housing costs and skills shortages threaten the labour market. Tourism and property: UK bookings for 2027 are down by as much as 30%, raising concern among hoteliers, while Cyprus property sales reached €3.7bn. Shipping: The ship registry has reached a 25-year high as Cyprus courts Asian shipping companies.

Tourism: UK bookings for Cyprus in 2027 are 20–30% below last year, hoteliers warn. Summer occupancy was also down 7%, despite a better September. Investment: Cyprus is pitching itself as an EU base for Israeli businesses, with banks and Invest Cyprus highlighting support for companies expanding into Europe. Defence Contracts: Israeli media report advanced talks on a roughly €150 million deal to supply Cyprus with naval vessels and weapons systems. Energy: The government has tied a €25 million payment for the Greece-Cyprus power link to Greece issuing a NAVTEX, adding a new condition to the project. Consumer Costs: From November 1, a new €2 charge will apply to each product category in orders from China, on top of the existing €3 levy. Corporate Finance: Louis plc will seek shareholder approval for a debt restructuring and refinancing package involving Bank of Cyprus.

Energy Projects: Cyprus has tied its planned €25 million payment for the Greece–Cyprus electricity link to Greece issuing a NAVTEX by the end of October. Agreements to advance development of the Aphrodite gas field are expected in Egypt this week, while the government says the delayed Vasiliko LNG terminal should be operational by 2030. Property and Tourism: Property sales have climbed to €3.7 billion, and tourism posted its strongest September on record. Household Pressures: Almost one in four workers in Cyprus earns less than €1,500 a month; fuel prices also remain in focus, with Paphos reported as the island’s most expensive market. Finance and Shipping: Banks’ non-performing loan ratio edged down in July, while Cyprus’ ship registry has reached a 25-year high as the island courts major shipping firms in Japan.

Energy Costs: Cyprus will pay towards the Great Sea Interconnector only once it is delivering electricity, Energy Minister Michael Damianos said. Of €302m in costs claimed by Greece’s operator, Cyprus’ regulator has verified €82m. September inflation reached 5.2% in Cyprus, with energy prices across the euro area surging 18.9%. Tourism: September arrivals hit a record 580,889, up 1.8% year on year, but visitor numbers for January to September remained 5.6% below 2025. Property: Transfers totalled €3.72bn in the first nine months, up 6.6%, while deposited sales contracts climbed 14% to 14,969. Shipping: Cyprus is courting Asian shipowners as its registry reaches a 25-year high; rising attacks on trade routes are adding concerns over crew safety, insurance and operating costs. Pensions: A proposed reform would require company owners and employee-shareholders to pay social insurance on some dividend income, addressing low declared salaries alongside dividend earnings.

Vasiliko LNG: Eight firms have expressed interest in the €180 million retender, but contractor experience, risk allocation and oversight will determine whether Cyprus avoids another project failure. EU Funding: President Nikos Christodoulides urged local authorities to prepare projects for a stated €3.5 billion funding envelope for 2028–34, although the EU budget is still under negotiation. Household Costs: Identical groceries were priced up to 226% apart across stores, while farmers’ market produce averaged 26% cheaper than supermarket prices. Banking: CDB Bank’s voluntary exit package reportedly offers payouts of up to €350,000, extending a trend of schemes exceeding the €200,000 tax-free amount. Energy Costs: Averof Neofytou called for the EU to review Russian energy sanctions, warning that higher costs could add to inflation and household pressure.

Cost of Living: Identical groceries in Cyprus were priced up to 226% apart across supermarkets, while produce at a farmers’ market averaged 26% less. Inflation is also squeezing households, and bank exit packages have reached €350,000 as staff seek payouts above the tax-free threshold. Business Expansion: A Cypriot engineer’s workshop plans a €120 million expansion, while Grigoris is adding 15 stores and plans further growth. Shipping and Trade: Cyprus’ ship registry has grown 27% as the island courts Japanese shipping firms; airports and Limassol port generated €1.57 billion. Financial Oversight: Three people were arrested in Cyprus in a €114 million European VAT fraud probe, while CySEC fined investment firm Titanedge €100,000 over breaches. Technology: Cyprus is aiming to become an Eastern Mediterranean AI hub by 2032, as experts warn the island risks remaining a passive user of the technology.

Energy Costs: Fidias Panayiotou led a protest against high electricity bills, with organisers saying power prices rose 15% year-on-year and are squeezing households and businesses. A Turkish Cypriot fuel workers’ strike ended after K-Pet reversed plans to lay off nine staff, clearing the way for fuel deliveries to resume. Investment and Retail: Cypriot engine-maintenance company UAMCO plans a €120 million expansion in Aradippou, taking its workforce to as many as 130. Grigoris has doubled its Cyprus outlets to 15 and plans further openings. Tax Probe: European prosecutors estimate an alleged cross-border smartphone VAT fraud caused €115.5 million in unpaid tax; four Cypriot businessmen are accused of directing the operation, and Greek assets linked to five people have been frozen. Digital Economy: Cyprus accounts for 81% of output from AI agent tools among OpenAI’s European business customers, while the island’s fintech sector is nearing 200 firms. Economic Outlook: The IMF’s 2026 growth forecast for Cyprus is 2.9%. Shipping: Cyprus’ ship registry has grown 27% as the island courts Japanese shipping companies.

VAT Probe: European prosecutors froze assets in a suspected €115.5m smartphone VAT fraud, saying four Cypriot businessmen directed the scheme from Cyprus; three people were arrested on the island. Shipping: International Seaways agreed to buy Bruton for about $370m, adding four tankers; family trusts of Cypriot-born John Fredriksen hold a major stake in the buyer. Cyprus’ ship registry has also grown 27% as the island courts Japanese shipping firms. Trade and Tech: Cyprus promoted cybersecurity, fintech and digital services at UAE exhibitions, while trade with Armenia rose sharply to $15.2m in January–August. Local startups secured more than €110m across 28 deals this year. Economic Outlook: The IMF forecasts 2.9% growth for Cyprus in 2026, while the import bill is widening the trade gap. Energy: Eight bidders are vying for the stalled gas terminal, valued at €180m, as Cyprus shipping firms seek a role in the Kronos gas development.

Financial Crime: Three people were arrested in Cyprus in a European investigation into an alleged €114 million smartphone VAT fraud scheme, with losses reported in Sweden and Germany. Investment Oversight: CySEC fined Titanedge Securities €100,000 for misleading online information, giving investment advice without authorisation and weak compliance controls. Shipping: Cyprus’ ship registry has grown 27% since September 2023 to its highest level in 25 years, as officials seek to attract more Japanese shipowners and business. Technology Trade: Cyprus used major Dubai technology exhibitions to promote its cybersecurity, fintech and digital services expertise and build links with UAE and Gulf businesses. Regional Trade: Armenia and Cyprus are exploring closer economic ties; bilateral trade rose more than ninefold to $15.2 million in January–August 2026. Energy Links: Energy Minister Michael Damianos told a visiting US senator that the Great Sea Interconnector is a strategic priority for ending Cyprus’ electricity isolation.

Energy and Infrastructure: At the EU summit, President Nikos Christodoulides called for more flexibility to ease energy costs and delay ETS2. Nexans has also sought permits to resume surveys for the Greece–Cyprus power cable, though the timetable remains uncertain. Shipping and Gas: Cyprus shipping firms are seeking work on the Kronos gas-field development, as the project targets first gas exports in 2028. Greece and Cyprus are also courting Japanese shipping partners. Financial Regulation: CySEC fined Limassol-based Titanedge Securities €100,000 for misleading client information, unauthorised investment advice and weak compliance procedures. Economic Outlook: The IMF’s forecast for Cyprus is encouraging, while the country’s trade deficit widened by €820 million to €6.3 billion in the first eight months of 2026 as imports outpaced exports. Public Revenue: Airport concessions and Limassol port have generated €1.57 billion for the state over two decades, with port income expected to top €80 million in 2026.

EU Budget: Cyprus President Nikos Christodoulides has proposed replacing the EU’s seven-year budget with a three- or four-year plan, warning the next framework could be more than 10% smaller than the Commission’s proposal. Leaders remain deadlocked, and a year-end deal is in doubt; Cyprus has also joined calls to end member-state rebates. Energy & Infrastructure: Eight bidders are in the race for a €180 million second attempt at Cyprus’ stalled gas terminal, while fuel prices face further pressure. Growth & Finance: The IMF has cut Cyprus’ 2026 growth forecast to 2.9%. ESMA says Cyprus leads the EU in cross-border investment services as retail clients increase. The government is also proposing tougher crypto rules, with fines of up to €15 million, while Bank of Cyprus CEO Panicos Nicolaou’s term has been extended to 2031. Agriculture: Cabinet approved €4.6 million in EU-funded aid for farmers affected by the 2025 drought.