Cyprus falls behind on EU recovery plan, meets only 5% of targets

In today's 'Oikonomiki', Panayiotis Rougalas reports that Cyprus has only achieved 5% of the milestones outlined in its Recovery and Resilience Plan (RRP), falling far behind other European Union countries in implementing reforms tied to the EU’s Next Generation funding program. Despite receiving a positive assessment from the European Commission last week for its second payment request of up to €152 million, Cyprus remains near the bottom of the scoreboard for meeting the milestones necessary to receive further funds.

As of now, Cyprus has completed just 31 milestones out of a total of 166 investments and 116 reforms it must fulfill by June 2026. These include critical reforms in education, labor, health, and society, with only partial progress made. Cyprus has thus far secured €236 million in grants and €26 million in loans but must complete 95% of its targets to access the full €1.22 billion in available funds.

In comparison to other EU countries, Cyprus lags significantly. France leads with 73% of milestones met, followed by Denmark at 46%, and Luxembourg at 43%. Other nations such as Austria, Germany, and Greece are also progressing much faster, while Cyprus ranks just above Sweden and Hungary, both of which have yet to submit payment requests.

The primary challenge for Cyprus is implementing key reforms and investments that are not just about receiving funds, but also advancing the state’s infrastructure and policies. Officials acknowledge the pressing timeline and emphasize the need to avoid falling short of the available grants, which do not require repayment.

Cyprus still has time to catch up, but there is significant pressure to meet the remaining milestones by the 2026 deadline. EU officials have indicated that the failure to meet these targets could result in Cyprus losing out on the full financial package. Although the European Commission gave a positive assessment of 37 out of 38 milestones in the most recent request, one critical piece of legislation related to aggressive tax planning remains incomplete. The Commission has initiated a "suspension of payments" procedure, offering Cyprus additional time to meet this specific milestone.

The Next Generation EU fund is seen as a crucial financial incentive to support member states in building resilient and inclusive economies. Cyprus now faces a race against time to maximize the benefits of this unprecedented recovery effort.