First tranche of Recovery funds will be applied for in July

Cyprus is expected to submit a request to the European Commission for the first tranche of money from the EU’s Recovery and Resilience plan fund worth €85 million around the third week of July, a government source said on Wednesday.

The first instalment was scheduled to be sent to Cyprus last February but the procedure was delayed due to disagreements between parties over a bill relating to reducing non-performing loans (NPLs).

More specifically, the disagreements related to a provision in the legislation drafted by the government, allowing debt administrators access to the financial data of collateral providers and loan guarantors.

However, in parliament on Monday, the government and the opposition seemed to have found a sweet spot – inserting certain safeguards into the bill so that access to loan guarantors’ financial information will be granted to debt administrators only in cases where the latter provide documentation demonstrating that this information is essential.

In addition, debt administrators will be supervised by the Central Bank of Cyprus.

“An agreement has been reached in Parliament for a technical solution, which will be subject to legislative and technical processing by the ministry of finance and the Legal Service first, and the European Commission after,” director general of the finance ministry’s development department Theodosis Tsiolas told the Cyprus News Agency.

He explained that the amended bill will be discussed again during the House finance committee meeting on June 20, before being brought to the plenary in the first week of July.

“Two weeks after its approval, we will then submit the request to unlock the funds to the European Commission,” Tsiolas said.

However, the delay in reaching agreement on the preconditions of the first disbursement derailed the timeframe of the second disbursement which was initially scheduled for end-August 2022.

“When you submit the request for the first disbursement around the end of July, the process is extended, which means the request for the next disbursement, if all goes well, will be October or November,” Tsiolas explained.

Replying to a question, DG Growth chief explained technically the authorities could unify the two disbursements in one although initially there were thoughts towards this end.

He stated that he does not see any danger of losing funding from the plan, adding the authorities will expedite the process “to catch up” with the time frame.

The Recovery and Resilience Plan’s funds are expected to be disbursed from 2022 to 2026. So far Cyprus has received pre-financing amounting to €157 million in June 2021.