North Cyprus State Planning Organisation (SPO) 
Economic Developments in North Cyprus:

 [General] [GNP] [Investment] [Prices
[Employement]  [Public Finance] [Foreign Trade
[Balance of Payments]  [Economic Sectors

  I. General

North Cyprus State Planning OrganisationThe  development policy in the Turkish Republic of Northern Cyprus aims at the realization of structural adjustment required for the achievement of the highest possible rate of growth compatible with the maintenance of economic stability, the more equitable distribution of national income and the improvement of standard of living.

For the realization of these objectives long-term plans and annual programs have been prepared and put into action since 1977 which marked the beginning of the planning period.

In accordance with the liberal economic policy adopted by the government of the TRNC Trade, Tourism, Education, Transportation and  Industrial sectors preserved their priority and importance.

For the assessment of  the economic performance in the TRNC the following economic indicators are worth examining.


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  II. Growth Rate of Gross National Product (GNP) 
The annual average rate of growth realized as 4% during the period of 1977-1999. The GNP which was 3,810.5 million TL in 1977 rose to 9,090.8 million TL in 1999 at constant prices of 1977 which accounted for 407,069,775.4 million TL at current prices and 963.9 million at US dollar basis. These developments can easily be seen in the tables 1 and 2. at sectoral basis.  
  Per Capita GNP 
During the period of 1977-1999 GNP per capita has increased by 67.5% at constant prices of 1977. The GNP per capita which was 26,279 TL in 1977 rose to 44,010 TL in 1999 at constant prices of 1977 and 1,970,690,521 TL at current prices of 1999 which represents 4,666 US $.

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  III. Fixed Capital Investments 

For the realization of the growth rate targets set in the long-term plans and annual programs, Turkish Republic of Northern Cyprus was badly in need of financial aid, so certain giant infrastructural projects such as the construction of the airports, sea ports, dams, derivation canals, highways, power plants and the improvement of the telecommunication systems were all financed by the Republic of Turkey. Through the years most of the infrastructural projects have been completed and same are about to be completed. Financial and technical aid of Republic of Turkey for such investments is continued. The fixed capital investments which were realized as 524.6 million TL in 1977 reached 21,715.1 million TL at constant prices of 1977 and 152,599,306.1 million TL at current prices, in 1999 (cumulative).

At the beginning of the planning period the share of the public sector in the fixed capital investments was much higher than the share of the private sector due to intensive infrastructural projects. In recent years the share of the private sector began to rise. The shares of the public and the private sectors in the total fixed capital investments of 1999 reached to 40.7% and 59.3% respectively.

The sectoral distribution of the  fixed  capital  investments  during  the  period  of  1994-1999 is shown in table 3. 


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  IV. Price Trends 

Looking at the price trends in the TRNC, changes in the consumer price  indices show that, a high rate of inflation has been prevailing in the Turkish Republic of Northern Cyprus. Although it went up as high as 92.97% in 1980 it declined in the subsequent years. But these positive developments were deteriorated in 1984 when the consumer price index growth rate rose again to the level of 70.72%. 

During the period of 1985-1987 it prevailed between 40-48% but in 1988 the inflation began soaring again and it reached 61.16% in 1993. The following table show the consumer price indices and yearly changes in the consumer price indices for the years 1994-1999.


Table 15. Changes in Price Indices

Year CPI  (Dec.1978=100) Change in CPI, %
1994 229,068.45 215.01
1995 394,340.01 72.15
1996 739,557.65  87.54
1997 1,343,588.19 81.67
1998 2,236,987.30 46.33
1999 3,474,072.81  66.49

Source: State Planning Organization


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  V. Employment 

The employment policy aims at attaining full employment and the systematic promotion of schemes for the  training and re-training of the labour force for increasing productivity and eventually the most efficient utilization of manpower.

There is not any acute unemployment in the TRNC because the official registers of unemployment has shown a constant decline over the years. Within this context the average number of unemployment dropped  from 1,337 in 1977 to 957 in 1999 and eventually the unemployment ratio which was 2.9% in 1977 dropped to only 1.08% in 1999.

During the period of 1977-1999 the working population has increased by 95.4%. The working population which was 44,795 in 1977 rose to 87,515 and constituted 42.4% of the total population which reached 206,562 in 1999. During this period 42,720 people were employed in the economy but they were mostly employed in the services sector and consequently lack of productivity and disguised unemployment were the two important question requiring solution. The sectoral distribution of the working population is shown in  Table 16.


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  VI. Public Finance 

The basic aim of the fiscal policy in the Turkish Republic of  Northern Cyprus is the creation of the necessary conditions for internal monetary stability, supporting the more productive projects, reducing the budget deficits by limiting the rate of growth of current expenditures, transfers and increasing revenues.

The total local revenues which is composed of tax revenues, non-tax revenues, factor incomes and the social funds, reached to the level of 268.1  million US $ in 1999. The tendency of local revenues can be seen in the table 4 prepared at dollar basis.

Until 1975 only 19.6% of the budgetary expenditures was met by the local revenues. In 1999 this ratio rose to 58.9%. Within this context the share of the taxes in the GNP rose from 10.7% in 1977 to 20.6% in 1999.

The breakdown of state revenues and expenditures and the balance of resources and expenditures are seen in the tables 5 and 6 respectively.

Table 4. Outline of State Revenues & Expenditures (Million US $)







I. Total Revenue







1. Local Revenue







2. For. aid & loan







  a) Foreign Aid







  b) Loans







II. Total Expnds







   1. Curr. Expnds







   2. Transfers







   3. Defence







   4. Investments







Annual average exchange rates at dollar basis
1994 1 US $ = 29,915.67 TL
1995 1 US $ = 46,544.51 TL
1996 1 US $ = 82,150.50 TL
1997 1 US $ = 154,893.30 TL
1998 1 US $ = 262,384.34 TL
1999 1 US $ = 422,312.61 TL
Source: State Planning Organization
  Bank Deposits 

The Turkish Lira deposits increased from 5,483,804.7 million TL in 1994 to 172,426,892 million TL in 1999. The increase in the amount of deposits was due to the rise of interest rates which attracted more deposits and diverted sight deposits to time deposits.

The foreign currency deposits which were 283.2 million US $ in 1994 increased by 82.8% and reached to 517.6 million US $ in 1999.

The developments in the bank deposits during the period 1994-1999 are seen in the Tables 13 and 14.


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  VII. Foreign Trade 

The economy  of  TRNC has the characteristics of an island economy with limited resources.

During the period of 1977-1999 there was an increase in the volume of the foreign trade. The volume of foreign trade which was 105.9  million in 1977 rose to 465.1 million dollars in 1999. During this period the imports of the TRNC increased from 82 million dollars in 1977 to 412.7 million dollars in 1999, while the exports rose from 23.9 million dollars in 1977 to 52.4 million dollars in 1999. The foreign trade deficit, which was 58.1 million dollars in 1977, reached 360.3 million dollars in 1999.

Table 7. Foreign Trade (Mn US$)





















Foreign Trade Deficit

233.2 298.8 247.9 298.9 377.1 360.3

Annual average exchange rates at dollar basis
1994 1 US $ = 29,915.67 TL
1995 1 US $ = 46,544.51 TL
1996 1 US $ = 82,150.50 TL
1997 1 US $ = 154,893.30 TL
1998 1 US $ = 262,384.34 TL
1999 1 US $ = 422,312.61 TL
Source: State Planning Organization

Export earnings met 29.1% of the total imports in 1977, 36.6% in 1978, 43.4% in 1979 and 50.1% in 1980. These favourable developments did not continue in the subsequent years and flactuated below 50% dropping  finally to 12.7% in 1999.

TRNC has adopted a liberal trade policy and practices no discrimination  against any foreign country. She has succeeded in establishing trade relations with more than 60 countries all over the world.  The share of Turkey and other countries  and, the foreign trade by countries can be seen in the Tables 8 and 9.

Agricultural and industrial products including processed agricultural goods are worth mentioning in the overall exports of the Turkish Republic of Northern Cyprus. The share of the agricultural products which accounted for 77.5% of the total exports in 1977 dropped to 38.4% in 1999. As for the share of the industrial products in the total exports increased from 12.1% in 1977 to 61.2% in 1999 (table 10).

The main agricultural and industrial products including agricultural based processed goods exported from TRNC can be seen from the following items:

Dairy Products Refreshments
Citrus Crops Tobacco and Cigarettes
Concentrated Citrus Hides and Leather
Fresh Vegetables Wool
Potatoes Readymade Clothes
Carobs (Seed and Grounded) Medicine

The Value of the Imports by Commodity Groups for the years 1994-1999 is seen from Table 11.


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  IIX. Balance of Payments 


During the period of 1994-1999 the exports decreased from 53.4  million dollars in 1994 to 52.4 million dollars in 1999 while imports increased from 286.6 million dollars to 412.7 million dollars, consequently the foreign trade deficit increased from 233.2 million dollars in 1994 to 360.3 million dollars in 1999 (Table 12).


In the category of invisibles, the net tourism  revenues increased from 172.9 million dollars in 1994 to 192.8 million  dollars in 1999. The expenditure incurred by the Turkish Peace Force, the income from the Free Port and Zone, net factor income from abroad (receipts and payment arising from salaries, wages, rents and interest), educational income and expenditure were shown under the item of other invisibles and increased from  56.1 million dollars in 1994 to 77.2 million dollars in 1999.

These developments in the invisible items caused the surplus in the invisibles balance to increase from 229 million dollars in 1994 to 270 million dollars in 1999. Consequently, the current account deficit increased from 4.2 million dollars  to 90.3 million dollars  (Table 12).


The capital  movements in the TRNC’s Balance of Payments have, except foreign aid provided for long term investments, a short term characteristic.

During the 1994-1999 period, the foreign aid and loans showed an ascending tendency by increasing from 23.9 million dollars in 1994 to 96.5 million dollars in 1999. The net other capital movements which was  -107.9 million  dollars in 1994 reached to 35.6 million dollars in 1999. 

In conclusion capital movements balance increased from 52.1 million dollars in 1994 to 132.1 million dollars in 1999.

As a result of the above developments the overall balance of foreign payments decreased from 47.9 million dollars in 1994 to 41.8 million dollars in 1999 (Table 12).


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  IX. Main Economic Sectors 


    The  agricultural sector is the backbone of the economy in the TRNC. Although its share in the GDP is decreasing from year to year it is still of major importance especially as far as its contribution to GDP, employment, exports and supply of raw materials to industry are concerned.

    The contribution of the agricultural sector to the GDP increased from 619.3 million TL in 1977 to 822 million TL in 1999 at constant prices of 1977. The export of the agricultural products accounted for 38.4% of the total domestic exports and 17.8% of the working population was employed in the agricultural sector in 1999.     

    Owing to the unfavourable climatic conditions prevailing in the TRNC and in conjunction with the importance attached to the agricultural sector a considerable amount of subsidies have been paid over the years to alleviate the losses incurred in this sector.


    The TRNC  industry has  developed very small, small and medium-sized  enterprises, owing to the physical structure of the country. Industrial activities are mainly focused in food and beverages, textile and clothing and other such light industries.

    The manufacturing industry achieved one of the highest rates of growth during      1977-1999 period. The value added of the sector increased from 317.2 million TL in 1977 to 853.3 million TL in 1999 with an increase of 169 % at constant prices of 1977.

    The share of the sector in the GDP increased from 8.4% in 1977 to 9.5% in 1999 and the export of the industrial products accounted for 61.2% of the total domestic exports. Form the year 1974 to the year 1999, the number of production units increased from 230 to 740 and the number of personnel employed in these units increased from 2,148 to 8,571.


Tourism will continue to be a basic priority sector and one of the main factors of economic development.

In parallel to the economic program adopted by the TRNC the tourism sector has been singled out as the most important sector for the improvement of the economy and the government is determined to provide all the necessary incentives for the prospective  investors in this sector.

The bed capacity in the TRNC has increased from 3,265 in 1977 to 9,932 in 1999. During the same period the number of  accommodation establishments has increased from 46 to 115.

The number of the tourists  who visited TRNC and the net tourism revenues during the period of 1977-1999 can be seen in the table below:

Table 17. Tourist Arrivals and Net Tourism Revenues
  Tourist Arrivals

Net Revenue

Year From Turkey From Other Total (mn US$)
1977 84,779 10,160 94,939 30.2
1978 104,738 8,172 112,910 33.5
1979 95,115 13,286 108,401 33.7
1980 69,808 14,703 84,511 24.0
1981 62,660 15,474 78,134 23.9
1982 65,018  22,611 87,629 27.2
1983 78,649 20,285 98,934 37.1
1984 93,413 19,905 113,318 40.3
1985 103,791 21,284 125,075 47.3
1986 105,200 25,632 130,832 52.0
1987 147,965 36,372 183,337 103.5
1988 173,351 56,050 229,401 118.0
1989 214,566 59,507 274,073 154.9
1990 243,269 57,541 300,810 224.8
1991 179,379 40,858 220,237 153.6
1992 210,178 57,440 267,618 175,1
1993 281,370 77,943 359,313  224.6
1994 256,549 95,079 351,628 172.9
1995 298,026 87,733 385,759 218.9
1996 289,131 75,985 365,116 175.6
1997 326,364 73,000 399,364 183.2
1998 315,797 77,230 393,027 186.0
1999 334,400 79,615 414,015 192.8

Source: Tourism Planning Office; State Planning Organization. 

As it can be seen from the table 17 there are increases  in the number of tourists   and the increase in tourism revenues seems favourable for the attainment of the specified tourism policy.

Although we have two modern airports of Ercan and Geçitkale it cannot be said that all our problems in air transport  have been settled. In spite of the fact that, Ercan and Geçitkale Airports have not yet been recognized as international airports for political reasons, we can still effectively maintain airlink with the outside world via Turkey by public and private airline companies.


    Higher education is the very fast improving sector in the TRNC.In order to increase the contribution of the sector to economic,social and cultural development and improve the quality of education, the government is determined to encourage investments in this sector.

    Higher education is carried out mostly at universities offering instruction in english. Apart from the Teachers’ Training College and the Open University, there are five universities in TRNC.

    The number of students pursuing higher education in these five universities reached 20,876 during the 1999-2000 academic year. The distribution of students can be seen in the table below:

Table 18. Students in Higher Education Institutions
Academic Year  From N.Cyprus From Turkey Other
1994-95 3,100 7,854 698 11,652
1995-96 3,501 9,189  739 13,429
1996-97 4,062 10,973 894 15,929
1997-98 4,978 11,539 1,021 17,538
1998-99 5,669 11,233 1,305 18,207
1999-2000 6,644 12,583  1,649 20,876
Source: Ministry of Education and Culture

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  TRNC State Planning Organization, Nicosia, January 2001.