Panayiotis Rougalas
EU member states, including Cyprus, were required to complete all the milestones and targets under the Recovery and Resilience Facility (RRF) by August 31, 2026, and submit their final payment requests by September 30, 2026. Cyprus did so on September 18, 2026. Then, on October 2, Cyprus received €120 million from the Facility, bringing the total it had received up to that point to €700 million. By December 2026, assuming the country is judged to have properly completed all the required milestones and reforms, Cyprus is expected to receive another €285 million. That would bring the Recovery and Resilience Facility program for Cyprus to a highly positive conclusion, with €992 million in grants. The absorption rate of RRF funding would reach the admittedly very high level of 97.3% by the end of December 2026.
That is an achievement for Cyprus, whatever reasonable concerns existed between 2021 and 2026 about funding the country might fail to receive from the Facility. When the investments and reforms were designed by the government of Nicos Anastasiades during the Covid-19 era, just before 2021, nobody imagined that Cyprus would successfully complete such an ambitious Plan. After all, “reforms” and “Cyprus” were not words we were used to seeing go hand in hand. That is why concerns began to emerge from the first years of the Plan’s implementation.
For roughly the first two or three years, reforms needed to unlock specific investments proceeded at a toddler’s pace. Other reforms were frequently accompanied by the fear that Cyprus could lose the funding it was supposed to receive. The European “bogeyman” threatening to take away the money was always there. While that may sound “childish” at first glance, it worked remarkably well in Cyprus’s case. To get a sense of just how slow things were, as recently as the autumn of 2024, Cyprus had received only €236 million in grants, while the RRF Scoreboard showed that the country had completed just 5% of its milestones and targets.
If we look at what Cyprus left on the table, the milestone that was not fully completed, but only partially, was green taxation. This would have meant higher fuel prices and another hit to the pocket of the average Cypriot. And yes, Cyprus lost around €20 million, but the scales would have tipped against the average Cypriot every time they pulled into a gas station.
At the same time, Cyprus also left behind money it could have accessed through loans. Most of that funding concerned the GSI cable, which, judging from what has emerged to date, was ultimately a political decision. It is worth remembering that Cyprus’s Plan included more than €1 billion in grants, as well as €200 million in loans for investments.
The new challenge, Cyprus’s next Recovery and Resilience Facility in all but name, is the Multiannual Financial Framework for 2028 to 2034. Once again, we are watching the familiar clash between the “frugal” states and the “friends of cohesion,” a scene we already saw when the RRF Plans were being drawn up. Once the 2028 to 2034 Framework is finalized, Cyprus will once again be expected to pursue investments and reforms using one of the pools of European funding available to member states.
The experience of the RRF should work in Cyprus’s favor. And it would not be surprising to see the new European “bogeyman” return when needed, carrying fresh warnings about losing funding if the country fails to deliver the required reforms.
Given its size, Cyprus is one of the countries that can benefit both financially and in practical terms from programs of this kind. The funding available through the 2028 to 2034 Framework could pave the way for a new round of investment and meaningful change.
