By Jean Christou
CYPRUS fulfils the Copenhagen political criteria for accession to the European Union, but the island has still only adopted 15 per cent of existing European standards, the EU Commission’s progress report on the island’s accession bid has revealed.
The report says that although Cyprus’ functioning market economy should be able to cope with the competitive pressures within the bloc, serious imbalances exist in the area of economic growth.
“Recent growth has depended upon domestic rather than external demand and there is increasing evidence of macroeconomic and financial imbalances,” the report, released on Wednesday, said.
It specifically mentions the serious deterioration of both the current account and the fiscal account, coupled with the unsustainable growth of stock market valuations. These are causes of concern, but it is expected the successful passage of the government’s tax proposals will help reduce domestic demand, bridge the fiscal deficit and ease pressure on the current account, the report says.
Cyprus also needs to renew its efforts in the areas of structural reform and deregulation. Progress towards privatisation has been slow and needs to be speeded up.
“The removal of the nine per cent interest rate ceiling is long overdue and needs to be removed at the earlier opportunity,” the report said.
“Cyprus has made very little progress in further alignment with the internal market acquis since the last regular report. There has been no new legislation in the area of standardisation and the adoption of a new law regulating this area is urgently needed. So far Cyprus has only adopted 15 per cent of existing European standards.”
The report also said that while involving certain short- term costs, “the integration of the north of Cyprus would improve the growth aspects of the island and enhance its attractiveness as a destination for foreign direct investment.”
In other areas, transport is lacking as far as legislation is concerned, particularly in the area of marine safety.
“The work undertaken to establish better safety standards has yet to show its effects. Although already decreasing, the detention of vessels is well above the community average of six per cent,” the report said.
As far as the environment is concerned, little visible progress has been made and the government needs to pay particular attention to the allocation of sufficient budgetary and administrative resources to this sector. The Veterinary sector also needs more stringent controls.
The report commended parliament for its impressive efforts to pursue an intense legislative programme, noting an important number of harmonisation bills had been tabled and a number adopted.
But the Commission said progress needed to be made in the area of immigration and asylum. It said there had been reports of ill treatment of asylum seekers by the police and cases of two wrongful deportations.
