As a full member of the European Union, Cyprus is successfully meeting the challenge of being part of the enlarged European family. The island’s economy is characterised by robustness and macroeconomic stability, which is evidenced by the favourable evaluations and comments of the European Commission, the International Monetary Fund and other international organisations.

During the period 2000 – 2004 the Cyprus economy recorded real GDP growth of 3,4%, which compares favourably with the EU average. This was accomplished in an environment of full employment conditions, low inflation and a stable and strong currency. In 2004 Cyprus’s per capita GDP reached about 81% of the EU-25 average. In addition, it should be pointed out that important structural reforms within the context of the Lisbon Strategy are in progress in order to further modernise and liberalise its market-oriented economy, with a view to enhancing its international competitiveness and EU compatibility. These structural reforms, together with macroeconomic stability, provide a strong foundation for the successful participation of the island in the euro area, hopefully by 2008.