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Economy needs some rest, says Minister

et ee rest, says Minister The Cyprus economy has “temporarily got tired and needs some rest”, the new Finance Min- ister Mr Afxentis Afxentiou told the Cyprus people on television this week. In his first public statement on the economic situation since taking over the Ministry a month ago, Mr Afxentiou confirmed that the labour shortage facing the island -- as reported in‘the Cyprus Weekly a few weeks ago -- was a “cause for concern”. Other problems he cited were: high infla- tion, a rising imports bill and a widening trade gap. The Finance Min- ister also spoke of “the relative ease with which loans can be se- cured from banks --a reference, economic observers thought, to rumoured plans to raise the landing rate. In his speech Mr Atxen- tiou said: “The affart for rac- onstruction of the economy and achievement of higher targets of ecenomla prog reas i being made today un- der more adverse conditions than ever before. The world economy, mainly a5 & result of the anergy crisié, is in a stata of depression and dis- array and is suffering a3 8 re- sult of unprecedented inflationary pressures, since tha Second World War. Negotiators from Cy- prus and the United States held talks In Nico- sia on amending the agreement tor the avoid- ance of double taxation between the two coun- tries. An official state- ment sald the negotiations were con- ducted “In an atmosphere of friendship and cordiali- ty”. “The very small size of Qur economy, its open char- acter, the continuing Turkish occupation and the insuffi- ciency of our natural re sources Constitute elements whieh tand to aggravate the unavoidable effect of exog- snous pressures on the Cy- prus economy. These conditions will have a nega- tive effect on the efforts we shall make for the stabiliza- tion and further development of our economy. Pressures “In addition to the ef- fects of the instability which characterizes the world economy, internal pressures have now appeared, despite the impressive reactivation of the economy, which tend to destabilize the economy even mare and to impede its fulure development”. Mr Afxentiou referred to the “remarkable econamic progress” achieved in recent The American team (left) at the two-day nego- tialions consisted of Mr Joel Rabinovitz, deputy Director, Office of Inter- national Tax Affairs, Treasury Department, Mr Steven Hannes, associate director and Mr M. Fein- berg, also associate di- rector, years, inthe wake ofthe 1974 war, and then remarked: “However, this continuous and intensive effort has led, due to other causes 45 well, to an overheating of the economy, To put the matter in a way more comprehansi- ble to all of you, | say that the econemy has temporarily got tired and needs some rest, Manpower He continued “The shortage of manpower, land and other natural resources and the increased depen- dence of domestic produc- tion on imports, are some of the rassone for concern. Re- cent Increases in labour costs, the reluclance or In- ability of profits to absorb in- creased labour costs or other elements of production costs, the existance of oli- gopoly marketing condi- tions, the inability of domestic production to re- The Cyprus side was led by Mr Andreas Apos- tolides, Director of the Depariment of Injand Re- venue, and Included Mr Andreas Strovolides, As- sistant Director, Mr Tas- sos Anastassiades, senior economic officer at the Ministry of Finknee and Mr Alecos Evangelou, Se- nior Counsel of the Repu- blic. and the relative ease with which loans can be secured from the banking system for consumption PUrPOSeS, pra vide grounds for serous raf lection, The inflation, tne widening deficit in the trade balance and the increased dependence of the financing of domestic expenditure on resources from abroad, are avident symptoms of the above weaknesses which need te Be faced quickly”. Mr Afxantiou said he did not want to create “a climate of pessimism”. He believed the Cyprus econamy had “papeatediy proved it has both stamina and dynam-