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Reforms boosted by EU support group

Olli Rehn

By George Psyllides

CYPRUS is carrying out the necessary reforms of its economy with commitment, a top European Union official said on Wednesday, as a group set up to provide the island with technical assistance published it first report.

Vice-President Olli Rehn, responsible for Economic and Monetary Affairs and the Euro, said the reforms, included in Cyprus’ bailout adjustment programme, were helping repair the financial sector, restore the public finances and carry out important economic reforms, while protecting the most vulnerable in society.

“The Cypriot authorities are carrying out the reforms set out in the programme with commitment and determination,” Rehn said. “The Commission will continue to stand by the Cypriot people, not least through the Support Group for Cyprus, which is a concrete expression of European solidarity.”

The Support Group was launched by European Commission President José Manuel Barroso in March 2013 to coordinate the technical assistance requested by Cyprus to help implement specific reforms set out in its programme, alleviate the social consequences of the economic downturn and revive and diversify the economy.

The group’s experts assess technical assistance needs on the ground, help design the projects to be implemented and mobilise sources of funding.

The initial technical assistance activities have been financed through the EU budget, notably through the European Social Fund and the European Regional Development Fund.

The group’s focus is now to move projects into the implementation phase and complete the recruitment of three experts, who will be based in the Cypriot administration and will work in the areas of health systems and services, public financial management, and energy markets.

The group’s first activity report, which covers the period September-December 2013, presents the state-of-play of its work in six key policy areas: the budgetary framework and public financial management, revenue administration, immovable property tax reform, the welfare system, healthcare and renewable energy.

Reforming revenue administration includes a comprehensive long-term reform leading to the establishment of an integrated domestic tax department.

Technical assistance for this has been provided jointly by the European Commission and the International Monetary Fund.

Cyprus is also committed to reforming the social welfare system by July 1, 2014.

Key social and economic objectives of the reform include ensuring the efficient use of public funds, establishing an appropriate balance between social benefits and work incentives, securing a minimum level of income to ensure a decent standard of living, helping to reduce inequalities, and protecting the more vulnerable households.

A comprehensive database and the IT requirements to support the administration of the reformed welfare system should be in place by May 2014. The group is providing technical assistance in the design of the IT system which, once operational, will help centralise the competences and responsibilities related to the administration and provision of social benefits in the labour ministry, and rationalise the provision of these benefits.

The Support Group is also assisting in the initial phase of setting up an integrated IT/communication system for the national health scheme.

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