The EU’s finance ministers on Tuesday adopted recommendations and opinions on member states’ economic, employment and fiscal policies, including a package for Cyprus that mainly focused on much-delayed reforms.
Cyprus has been urged to take action this year and next to adopt reforms to improve the efficiency of the public sector in particular as regards public administration, governance of state-owned entities, and local governments.
The authorities must also address features of the tax system that may facilitate aggressive tax planning by individuals and multinationals, in particular by means of outbound payments by multinationals.
Ecofin also said Cyprus must facilitate the reduction of non-performing loans by setting up an effective governance structure for the state-owned asset management company, taking steps to improve payment discipline, and strengthening the supervision of credit-acquiring companies.
It must also strengthen supervision capacities in the non-bank financial sector, including by fully integrating the insurance and pension-fund supervisors.
The government must also complete reforms aimed at increasing the effectiveness of the public employment services and reinforce outreach and activation support for young people.
“Deliver on the reform of the education and training system, including teacher evaluation, and increase employers’ engagement and learners’ participation in vocational education and training, and affordable childhood education and care,” Ecofin said.
It must also ensure that Gesy becomes operational in 2020, as planned, while preserving its long-term sustainability.
Ecofin urged the government to focus investment-related economic policy on sustainable transport, the environment, in particular waste, and water management, energy efficiency, and renewable energy, digitalisation, including digital skills, and research and innovation, taking into account territorial disparities within Cyprus.
Adopt legislation to simplify the procedures for strategic investors to obtain necessary permits and licences, it said, in addition to improving access to finance for SMEs, and resuming the implementation of privatisation projects.
Efforts must also be intensified to improve the efficiency of the judicial system, including the functioning of administrative justice and revising civil procedures, increasing the specialisation of courts and setting up an operational e-justice system.
Measures must be put in place to strengthen the legal enforcement of claims and ensure reliable and swift systems for the issuance and transfer of title deeds and immovable property rights.
Anti-corruption reforms must be accelerated and the independence of the prosecution and the capacity of law enforcement strengthened.
According to the Council the overall objective of the recommendations is to encourage member states to increase their growth potential by modernising their economies and further strengthen their resilience.