The European Bank of Reconstruction and Development (EBRD) said that it had revised its forecast for the Cypriot economy to 3.2 per cent for 2018 from a previous 2.5 per cent.

In 2019, economic growth is expected to slow down to 3 per cent, the EBRD said in a statement on its website on Wednesday.

“However, the legacies of the crisis, such as high public and private sector debt and a large overhang of non-performing loans (NPLs), remain important downside risks,” said the lender which has a 5 per cent stake in Bank of Cyprus and 5.4 per cent in Hellenic Bank.

The Cypriot economy which emerged in 2015 from a prolonged recession, expanded 3.9 per cent last year, the highest rate since 2008, and 3.4 per cent in 2016, allowing the unemployment rate to drop this year to a single digit for the first time in years.

The London-based bank said that last year’s growth was driven by both investment and private consumption adding that fixed capital formation exceeded one fifth of economic output last year for the first time since 2010.

“After many years of negative contribution to growth, government spending also provided a small growth boost,” it said, adding that fiscal performance remained strong last year when the government generated a budget surplus of 1 per cent of the economy.

Still, “net exports were the only drag on growth as imports, supported by rising private consumption and investments, grew by a higher rate than exports,” it said.

Source: CyprusMail

The government has failed to properly support a committee it had set up to review cases of contractors suspected of bribery or misconduct forcing its chairman to resign, MPs said on Wednesday.

During a session of the House ethics committee, lawmakers said the chairman of the exclusion committee, Georgios Arestis, resigned because even though the state had established the committee to monitor the practices of contractors, it had failed to provide him with adequate support on a technical and staffing level.

Arestis, who previously served as a judge at the supreme court, had said he was leaving the job for personal reasons.

But Akel MP Aristos Damianou said the exclusion committee now in its second year of operating “does not even have a secretary, an office, nor the logistical and human resources so they can carry out their duties”.

“This is the reason that led to its chairman to resign and we want to believe that after today’s session those in power will receive the message. That they can’t set up institutions, grant them powers, authorities that have to do with clamping and deterring corruption but have no support.”But Akel MP Aristos Damianou said the exclusion committee now in its second year of operating “does not even have a secretary, an office, nor the logistical and human resources so they can carry out their duties”.

Greens MP Giorgos Perdikis called the state a useless entity which “not only doesn’t condemn illegality but rewards it.”

In turn, Diko MP Zacharias Koulias said “the very government that appointed people to the exclusion committee, in essence rid them of any opportunity to do their work.”

He added that Arestis had in the past sent a letter to the finance ministry’s permanent secretary, outlining problems but has yet to receive a response.

Arestis had apparently met with the finance minister, saw no change, sent a letter but got no reply.

Koulias questioned whether the government was really sincere in clamping down on corruption while Damianou appealed to the finance ministry to look into the matter immediately.

Source: CyprusMail

Eleni Foureira performs Fuego during the Semi-Final 1 for Eurovision Song Contest 2018

After a fiery performance at Tuesday night’s semi-final in Lisbon, Cyprus will be heading to the Eurovision Grand Final on Saturday.

Greek popstar Eleni Foureira will represent the island with the song Fuego by Greek-Swedish songwriter and producer Alex Papaconstantinou, and she has been slated to take first place in the final by betting agencies.

At Tuesday’s semi-final, Foureira appeared in a fiery glittering body suit and dazzled the crowd with her choreography and performance, where actual flames shot from the stage during her final chorus.

Foureira was born in Albania and moved to Greece with her family as child. She started her solo career in 2010 with the release of her self-titled album in December.

Cyprus has participated in Eurovision 34 times and came fifth in 1982, 1997 and 2004, the final time with Lisa Andreas with the song Stronger Every Minute.

The second semi-final is set for Thursday.

Yianna Terzi, daughter of Greek singer Paschalis Terzis, represented Greece with the song Oneiro Mou (My Dream) but failed to make it through.

Source: CyprusMail

Cyprus and Egypt are close to signing an agreement for connecting the Aphrodite gas field to the North African country, Energy minister Giorgos Lakkotrypis said on Monday.

Lakkotrypis, who was in Cairo on Monday for energy-related talks, met with Egyptian Petroleum Minister Tareq El Molla, after which talks were held between the two countries’ delegations.

The minister said following his meeting with El Molla, that they discussed the transnational agreement for an underwater pipeline that will connect the natural gas resources of Cyprus to the coast of Egypt.

The second issue discussed, “which is also important, was to discuss the progress of trade negotiations for the sale of the gas of the Aphrodite field to one of Egypt’s two terminals”.

He said that the discussions were advanced on both issues.

“We are very close to reaching an agreement as regards the bilateral agreement on the underwater pipeline, a necessary agreement to allow for trade negotiations to proceed,” he said.

Lakkotrypis also said that they discussed the progress of the trade negotiations between the energy companies licensed to explore the Aphrodite gas field on the one hand and Egyptian companies on the other.

“At this point too, we are at a very advanced stage. We hope to have results soon,” he said.

The Cypriot delegation included officials from the Cyprus Hydrocarbons Company. On the Egyptian side, the Egyptian Natural Gas Holding Company (EGAS) participated.

The talks agenda included the planned inter-state agreement for the construction of a gas pipeline from Cyprus to Egypt, Egypt-EU relations in the field of energy and regional energy cooperation.

In November 2017 the two nations signed a preliminary agreement to transport natural gas from Cyprus to Egypt to be liquefied at Egypt’s LNG facilities and re-exported to Europe and other markets.

Cyprus’ Aphrodite reservoir, discovered in December 2011 by Houston-based Noble Energy, is estimated to hold some 4.5 trillion cubic feet of gas.

Cyprus demarcated its maritime border with Egypt in 2003.

Source: CyprusMail

ANALYSIS

Bitcoin’s (BTC) blockchain hit a unique milestone in April as the 17 millionth BTC was mined.

If you’re wondering why this number is significant, it’s because there are only four mln tokens left to mine before the 21 mln BTC cap is reached. However, the truth is that most people alive today are unlikely to see that happen.

Bitcoin’s blockchain protocol makes mining more difficult as more miners join the pool, and the Bitcoin reward for mining a block also halves every 210,000 blocks. As it stands, miners receive a 12.5 BTC reward for unlocking a new block. According to BitcoinBlockHalf.com, the next reward halving will happen in May 2020 - reducing the reward to 6.25 coins.

Assuming that there are no changes to the protocol, the Bitcoin cap will be reached by 2140, 122 years from now.

Nevertheless, it’s taken just 9 years to mine 80 percent of the total Bitcoin that will ever be available, in a little over 520,000 blocks, as shown in the graph below.

What happens when we mine the last Bitcoin?

Currently, miners are still heavily incentivized to mine in order to obtain increasingly more valuable Bitcoin tokens as a reward before the supply reaches its capacity.

But, when the day comes that the 21 mln cap is hit, there will be no more BTC rewards for miners. However, transactions still need to be validated and stored on blocks in the blockchain - so miners will only benefit from transaction fees.

As it stands, Bitcoin transactions are processed by the network in order of the transaction fee associated to that specific transaction. The higher the fee, the more incentive there is for a miner to prioritise your to be included in a block.

This could essentially be the lifeblood of miners in the next century, once there are no more BTC tokens to be unlocked. This is laid out in Satoshi Nakamoto’s Bitcoin whitepaper:

“Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free.”

What could happen in between?

A major point to consider here is that there are more than 100 years to go before the last Bitcoin is created. Considering that it’s just been short of 10 years since the Bitcoin’s inception, a lot could happen during this time.

As Nakamoto envisaged, nodes are responsible for maintaining the blockchain and verifying transactions. The move away from a trust-based system to a proof-of-work system that operates by consensus of the longest chain:

“They [nodes] vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. Any needed rules and incentives can be enforced with this consensus mechanism.”

The last sentence of that statement is particularly telling, as miners and exchanges have had to operate in tandem at trying times in the last few years.

Segwit revisited

In 2017, the issue of scalability, block capacity and transaction costs came to a head.

In 2010, Nakamoto implemented a 1MB size limit for blocks in order to stop miners producing bigger blocks that were likely to be rejected by the network - which could have caused the blockchain to split.

At the time, the limit was more than big enough due to the small amount of transactions and the fact that a change could be implemented at a later stage - if need be.

Nevertheless, concerns that were raised were eventually realized as Bitcoin grew in popularity. Bitcoin Core developers eventually came up with a solution known as Segregated Witness, commonly known as SegWit.

In essence, Segwit separates non-signature data from signature data of each transaction, greatly reducing transaction sizes stored on a block. Furthermore it cancels out transaction malleability by removing signatures from transaction data - which paves the way for lightning network integration.

Segwit was eventually implemented in Aug. 2017, as major stakeholders from the largest mining pools and Bitcoin companies pushed for a solution to high transactions fees caused by a backlog due to the block size limit.

Some called for bolder measures - an increase in the block size to 2MB called Segwit2X. There were a number of issues, namely the lack of replay protection and the fact that the move would require a hard fork. Ultimately the change was never implemented.

The main caveat here is that the implementation of Segwit was possible due to the consensus of the Bitcoin community - just as Nakamoto pointed out in his white paper. Where there were greater concerns, like the shortcomings of Segwit2X, the community was divided and the change was never implemented.

Changes to the protocol

Segwit’s implementation has been slow across the overall network since Aug. 2017. Big players like Coinbase and Bitfinex only introduced the change in Feb. 2018.

The launch coincided with lowering transaction fees - a testament to the intended outcome of Segwit integration. As the following graph shows, transaction fees have dropped considerably in the past few months as Segwit continues to be implemented to nodes around the world.

Lightning network

SegWit’s implementation also laid the foundation for second layer solutions to further improve Bitcoin’s network.

The most anticipated is the Lightning Network, which will essentially do what SegWit has done but on a grander scale.

In layman’s terms, the Lightning Network will allow users to open up multiple payment channels between themselves off the Bitcoin blockchain. The channel will be opened and recorded on the blockchain, but transactions will be done off chain until the payment channel is closed.

In essence, users deposit Bitcoin into this channel and make transactions by transferring promise of ownership to each other. When they decide to close the channel, the users take their proportion of the total sum and the ownership of those amounts is recorded on the blockchain.

To get an in depth explanation, you can read Cointelegraph’s Lightning Network guide.

What matters here is that this second layer solution will greatly increase the speed of transactions and therefore the network as a whole.

However, this does pose some interesting questions for miners in the future. Once all 21 mln Bitcoin have been mined, transaction fees will be the only incentive for miners. If the Lightning Network is full integrated by this time, there could be far less transactions being recorded on a daily basis.This could potentially affect the amount of money miners will be making from transactions.

However, 100 years from now, it seems likely that all of these problems will have been answered by Bitcoin Core developers and the wider cryptocurrency community.

Source:Cointelegraph

Fees on lease or rent of land will be scrapped by the land registration office, after a majority vote in parliament on Friday.

Specifically, two bills on VAT were voted into law, both hailing from ruling Disy.

The first outlines that where lease or lent to someone subject to VAT for the purposes of taxable business activity purposes will be paying their tax but will be let off from paying fees to register the deed at the land registry office.

he bill was voted through with 46 votes in favour and two against by the Green Party.

A second law seeks to apply the same VAT for a lease and the purchase of immovable property.

For instance, a home up to 200square meters will be subject to five per cent VAT whether it is a lease or purchase.

A property over 200square meters will be subject to a 19 per cent VAT.

This will come into effect starting September 1 this year.

Source: CyprusMail

Cyprus` unemployment rates will further decline to 9.0% in 2018 and 7.1% in 2019 (11.1% in 2017) according to the Spring Economic Forecast of the European Commission, published today in Brussels. According to the same forecast, public debt will rise again to 105.7% in 2018, only to decline to sub 100% (99.5%) levels in 2019 (in the no policy change scenario), while Cyprus` budget will remain on the positive side with overall surpluses of 2.0% and 2.2% for 2018 and 2019. GDP will continue growing by 3,9% in 2017, 3,6% in 2018 and 3,3% in 2019.   

The European Commission foresees that the "strong growth momentum continues" in the coming years, but, downside and upside risks widen.

According to the spring forecast, "recent developments in the financial sector have widened the risks to the outlook", as tourism faces both upside and downside risks, and gas exploration projects could further support the outlook in the short to medium term.

More specifically the Commission says that "while the recently expanded air transport and accommodation capacity brightens the sector’s prospects, the reopening of neighboring markets for this season increases competition and at the same time, even stronger investment than currently foreseen and advancement of gas exploration projects could further support the outlook in the short to medium term."

The Commission recognizes that Public debt fell significantly in 2017, however, it is expected to rise by around 8 points of GDP in 2018 to 105.7%, "due to the government’s operations with the CCB, which included the issuance of bonds of EUR 2.35 bn, the proceeds of which were deposited with the CCB". Public debt is projected to steadily decline thereafter, "mostly owing to the projected primary surplus and strong real GDP growth", says the EC.

Overall according to the Cyprus chapter of the forecast, "economic growth is expected to be strong, fuelled by foreign-funded investment and solid private consumption, unemployment has fallen below 10% and is expected to continue decreasing, inflation remains very low and is set to stay moderate, the budget surplus is projected to further improve, although risks to the fiscal outlook remain and public debt is expected to increase in 2018 but to decline again in 2019."

The Commission states that after strong growth of 3.9% in 2017, early hard data and survey indicators point to robust growth in the first quarter of 2018. "The growth momentum is expected to continue with GDP forecast to expand by 3.6% in 2018 and 3.3% in 2019, underpinned by strong domestic demand. Net exports, by contrast, are projected to have a negative impact on growth".

Furthermore, "private consumption accelerated in 2017, as rapid employment growth and low inflation provided a boost to households’ real disposable incomes, most sectors of the economy have markedly increased the number of employees, the unemployment rate fell below 10% in early 2018 and employment expectations and consumer confidence are on the rise, supporting the outlook", says the European Commission report, but warns that inflation will remain subdued: "after a very modest 2017, inflation was surprisingly weak in the first quarter of 2018 (-0.9%), with all components, except services, in negative territory."

"While some of the deflationary pressures came from one-off factors, notably in unprocessed food category, stronger competition among suppliers keeps prices in Cyprus low", says the report, and foresees that "inflation is expected to rebound somewhat, driven by energy and service prices, but to remain low at 0.7% for the year as a whole before increasing moderately to 1.2% in 2019".

According to the report, investment becomes the engine for growth as in 2017, investment surged further, strongly supported by construction, as the tourism boom has created additional demand for accommodation and other infrastructure, while new residential construction also increased.

The report states that "investment in equipment has been even stronger, mainly as a result of the growth in ship registrations", and "the near- term outlook for investment is very positive, supported by foreign-funded large-scale projects", while "a gradual revival of new bank lending is expected to lift investment further."

Furthermore, "amid strong domestic demand, imports increased sharply in 2017, outweighing the healthy growth of exports and leading to a marked widening of the current account deficit."

The Commission finds that "activities of special purpose entities, particularly linked to ship registration, heavily influence the current account in Cyprus, determining a very large share of its deficit" and warns that "a further deterioration of the current account is projected in both 2018 and 2019 due to the high import content in investment and consumption, which should outweigh the forecast increase in service exports."

"General government surpluses increasing further, but risks to the outlook remain."

When it comes to public finances the Commission registers the primary balance of 5.0% of GDP in 2017, "one of the highest in the EU", attributing it "to high tax collection, in particular of VAT, social security contributions and corporate income taxes". "In structural terms, this corresponds to a surplus of about 11⁄2% of GDP", states the EC.

"In 2018, the headline and primary surpluses are forecast to remain high at 2.0% of GDP and 5.0% of GDP respectively", mainly explained by the "expected good performance in revenues underpinned by the positive economic outlook and the improving labor market."

Both total revenue and total expenditure are forecast to increase (by around 4% each), but they are set to marginally decline as a percentage of GDP (to 39.6% and 37.6%, respectively).

Finally Downside risks to public finances stem from:

- the absence of a mechanism regulating public sector payroll growth from 2019 onwards,
- the potential additional costs of the national health system reform and the contingent risks from the high proportion of NPLs in the banking sector and
- uncertainties on the budgetary impact of the government’s transaction on 3rd April 2018 related to the Cyprus Cooperative Bank (CCB).

Source: Stockwatch

The number of property transactions rose last month an annual 29 per cent to 655 mainly on a strong performance of the real estate market in Nicosia, the Department of Lands and Surveys said.

The number of properties that changed owners in Nicosia rose last month 46 per cent to 117 compared to April 2017, the department said in a statement on its website on Wednesday. The number of transactions in Limassol rose 28 per cent to 246 while those in Larnaca rose 20 per cent to 83. In Paphos, they rose 15 per cent to 157.

The highest increase was reported in Famagusta district where the number of transactions rose an annual 79 per cent last month to 52, the department said.

In January to April, the total number of transactions reported rose 38 per cent to 2,784, the department said. The figures also include an unspecified number of properties acquired by banks as part of loan restructurings.

Source: CyprusMail

Tax authorities are now eyeing short-term property rentals such as Airbnb which, due to loopholes in the law, are not subject to tax.

The matter was raised on Monday at the House finance committee, which discussed the leasing/renting of properties via online services.

Tax commissioner Yiannis Tsangaris said this income is not currently taxed. In order to be able to do so, laws pertaining to leasing needed to be amended first.

The first step, Tsangaris said, would be for the tax department to be granted authority to create a register of short-term leases.

Lawmakers meanwhile have tabled two related bills.

Disy MP Averof Neophytou, who authored one of the bills, said that the market is always several steps ahead of legislators and government.

In Cyprus, he said, many property owners rent out rooms and apartments online and, as a rule, such income is not declared and is therefore not subject to VAT, while no quality controls exist.

The law should mandate that properties used in this way be registered, and owners who do not register would be liable.

According to Neophytou, the majority of such lodgings are not licensed by the Cyprus Tourism Organisation (CTO).

He also cited a legal provision whereby single-day leasing is unlawful.

The other legislative proposal was tabled by Edek MP Elias Myrianthous. It provides for the registration and regulation of country homes that are not currently registered with the CTO.

Today there are some 20,000 country homes and holiday cottages that are unregulated but leased online.

Taxing these even at a low rate would bring substantial amounts into state coffers, Myrianthous said.

Source: CyprusMail

There are a number of rewards credit cards out there, and each seems to offer the user something different. Some offer points rewards that you can spend in their online store or trade in for discounts. However, two of the most common types of rewards are frequent flyer points or travel rewards and cash back rewards. How do you decide between these two types of rewards? By asking yourself a few simple questions.

How much do you travel?

This may seem like an obvious question, but the simple answer is if you don’t travel that much, frequent flyer mile rewards may not be nearly as beneficial to you. If you often travel by car, they also may not be worthwhile.

However, if you do travel frequently by air, getting frequent flyer rewards points, especially for other types of purchases you make besides travel, can be a great benefit and save you money in the long run, more money than you might make from cash back rewards.

What kind of travel do you do?

Do you travel for business or for pleasure? This may sound like a silly distinction, but business travel is often tax deductible and paid for with a business card. A frequent flyer rewards card might make more sense for your business than for you personally in that case, and even a branded card just for air travel can work well.

If you travel a lot personally, or your business reimburses you for travel expenses, a frequent flyer card can still make a lot of sense. Many companies have incentives for employees who are frugal on travel expenses and save them money, even cash bonuses.

This means that sometimes using your travel rewards makes a lot of sense and getting a frequent flyer miles card will work well for you.

What does the rewards program cost?

Many cards come with an annual fee, and rewards cards generally have higher fees. So whatever you are going to make from either frequent flyer miles or cash rewards should be more than that annual fee, usually substantially more, or the card is not really paying for itself.

For instance, if your card has an annual fee of $500, and is a frequent flyer miles card, if it takes you more than one year to earn back a $500 flight, the card is not worth it for you. If you have a cash back rewards card that has an annual fee of $100, but you earn back $700 cash in a year from your typical spending, the card is profitable, and worth having.

There are some great cash back rewards cards out there, that offer great benefits at a low cost, like the HSBC Advance Card available exclusively through Bank Bazaar.

Do I carry a balance on the card?

If you use the card for business or for personal use, do you carry a balance on the card? If you do there are other expenses you should consider. If you carry a balance, there are interest charges each month, and potential penalties if you are late with a payment.

These all should be counted against the rewards you might receive and added to the overall cost of having the card. Ideally you are paying off your card every month when you get your statement, and will not encounter these charges, but things are not always ideal, and you need to look at different scenarios.

They key is to make sure that the card is not costing you more than it is saving you, or if you know the card will cost you something, that the rewards pay back enough of that to make it worthwhile.

Am I saving miles for a specific trip?

Another time that frequent flyer mile cards are worth it is if you are planning to travel to a specific destination or are saving up miles for a vacation and using points to cover the tickets. This can be a great way to plan a vacation if you have the right strategy.

● Use the frequent flyer card for bill pay: Your bills add up and you are going to pay them anyway. Use your credit card to pay them, and then pay it off. That way, you get points for paying your bills.
● Gas up: Use your card to pay for fuel expenses you were going to pay anyway. These will add up and add up to miles you can use.
● Just eat it: You are going to buy groceries and go out to eat anyway, right? Well, grab your card and pay the tab or the grocery bill, and pay it off each month. This will earn you points faster toward your trip.

Your purchases can add up to miles very quickly if you use the right methods, and pay for things you would anyway, then simply pay off your card each time you get a statement.

Choosing between a frequent flyer miles cared and a cash back card is a simple matter of doing math: which one of those cards will cost you less and benefit you more? By making reasonable comparisons before you apply for a card, you can determine which one will work best for you.

Source: CyprusMail