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Cyprus is situated in the eastern Mediterranean, lying at the hub of 3 continents and close to the busy trade routes linking Western Europe with the Arab World and the Far East. Cyprus’ total area is 9.251 sq kms and is comparable in size to Lebanon in the Middle East or Connecticut in the United States. The island’s time zone is 7 hours ahead of New York and 7 hours behind Tokyo. The island enjoys the best type of Mediterranean climate with about 300 days of sunshine per year. The bulk of the rain falls during the period from November to March. The coldest month is January with minimum and maximum mean temperatures of 6c degrees and 13c degrees, respectively, while in August, the hottest month, the corresponding minimum and maximum mean temperatures are 21c degrees and 36c degrees. Cyprus’ estimated population is 746.000 of which 85 percent belongs to the Greek Cypriot community, whilst the remaining 3 percent is made up of foreign residents. Greek and Turkish are the official languages of the Republic but English is widely spoken and understood, and is regularly used in commerce and government. Apart from the capital, Nicosia, with an estimated population of 194.000, all major cities are located on the coast. Limassol is the second largest city and the island’s biggest port. Larnaca and Paphos, which are popular holiday resorts, are the third and fourth largest cities, respectively.
The structure of government is similar to that in other western democracies where human rights, political pluralism and private property are safeguarded. The Head of State is the President of the Republic who is elected by universal suffrage for a 5 year term of office. The Council of Ministers, which is appointed by the President, is the executive organ of the Republic. Legislative power lies with the House of Representatives whose members hold office for a period of 5 years. There is a multi-part system of democracy based on proportional representation. Cyprus is a member of the United Nations and its specialised agencies, the Council of Europe and the British Commonwealth. The island also has a customs union with the European Union, which came into effect at the beginning of 1998, and is expected to join the EU by the year 2003. Cyprus is represented through full diplomatic missions in 29 countries, 9 major international organisations and several consulates general around the world. The legal system is based on the same principles as those applicable in the United Kingdom and all statues regulating business matters and procedures are based essentially on English law. Most laws are translated into English. The Continental system of administrative law, according to which the legality of administrative decisions can be judicially controlled, Original criminal jurisdiction rests in District Courts for has been introduced and applied by virtue of the constitution.minor offences and Assize Courts for more serious crimes. All appeals are heard by the Supreme Court which is also empowered to pronounce final judgement in all cases of constitutional and administrative law.
Cyprus has an open free market economy. The island is often aptly referred to as a European country in the Middle East. Per capita GNP is approximately US$14.000, one of the highest in the Mediterranean. Considering other socioeconomic indicators such as the excellent housing conditions, pollution free environment and low crime rate, one may conclude that the quality of life is better than that reflected by per capital income alone. Furthermore, the cost of living is substantially lower than in most countries offering a comparable standard and quality of life. Nicosia ranks as seventh least expensive of the leading 56 international business centres surveyed in Prices and Earnings Around the Globe published by the Union Bank of Switzerland in August 1997. The economy is driven by thriving tourist and service sectors and an export-oriented industry. In terms of their contribution to GNP, the most important sectors of the economy are: trade, hotels and restaurants; community, social and government services; finance, insurance and business services; and manufacturing. The performance of the economy has been such that it has combined high real growth with low inflation and low unemployment. Moreover, the economy is characterised by a low external debt service to exports ratio and high international reserves to imports ratio. Of the US$4,5 billion annual gross foreign exchange earnings, 38 percent originate from tourism, 22 percent from the export of goods, 9 percent from transportation and over 9 percent from international business and shipping companies. Trade, hotels and restaurants is the economy’s most important sector. In fact, earnings from tourism have, in general, grown faster than domestic exports. Over 75 percent of tourist arrivals originate from the European Union. Cyprus’ main exports are potatoes, citrus fruit, clothing, chemicals and toiletries, machinery and transport equipment, cigarettes, wood and metal products, cement and footwear. Manufactured goods and agricultural products account for 75 and 20 percent of domestic exports, respectively. With regard to imports, intermediate inputs and consumer goods are the most important categories, each account for more than 32 percent of total imports. Cyprus’ main trading partner is the European Union, accounting for about 55 percent of imports and 40 percent of exports.
The legal tender is the Cyprus Pound. Its ultimate market maker is the Central Bank which aims to keep it stable against the Euro (CY$1= 1,7086). In addition to the Central Bank, the banking system consists of 9 local commercial banks, 30 international banking units, 4 administered banking units, 3 specialised financial institutions and a number of leasing companies. Commercial banking arrangements and practices follow the British model. Strong correspondent networks are maintained around the world by local and international banks. Most of them subscribe to SWIFT, Reuters, Tolerate and other services. Thus, they have easy access to the world banking network and are able to carry out traditional and specialised financial transactions. Cypriots and foreigners residing on the island enjoy the benefits of a well developed insurance industry with all types of risk accepted, mainly through agents and intermediaries. Currently, 81 insurance companies operate on the island, 24 of which are incorporated abroad and represent well known multinational insurers. Of the remainder, 30 are international insurance companies and 27 are local companies. The authorities regulate local banks and insurance companies in such a way as to safeguard the interests of depositors and assured, and to channel investments into productive activities.
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