Cyprus told to speed up its recovery plan

Cyprus needs to speed up implementation of its Recovery and Resilience Plan (RRP) as risks of delays have been identified given that the island has only fulfilled 5 per cent of its reforms halfway through the EU programme, the Commission has said.

The RRP, also known as the ‘Cyprus Tomorrow’ plan, launched by the previous government under a wider EU programme for every member state, is being continued by the current government as part of its own agenda. The plan extends from 2021 to 2026.

Cyprus has to implement a total 271 targets over the six years but by the end of 2023 had only completed 14, leaving 257, or almost 95 per cent to complete by August 2026 when the EU money in the form of grants and loans dries up.

As it stands, around 45 per cent of the €1.2 billion available to Cyprus will support climate objectives and 24.6 per cent, the digital transition. The remaining 30 per cent of the support goes to health, education and welfare and other reforms.

According to the Commission, which this week evaluated member states’ RRPs at the halfway mark, in the area of climate and environmental policies, Cyprus faces the challenge of high greenhouse gas emissions, gaps in water and waste management, and the need to safeguard biodiversity and wildlife.

The Commission rated the Cyprus plan as ‘underway with some risks of delays identified’ and said Nicosia needed to “accelerate the implementation of its recovery and resilience plan” by also ensuring “adequate administrative capacity”.

So far €236.67 million has been disbursed to Cyprus in grants from the EU fund and another €26.04 million in loans from the total available for the 14 measures fulfilled so far.

The assessment at the halfway point for member states that was published this week showed that seven member states, including Belgium, Ireland, Hungary, and Poland had fulfilled zero of their RRPs. Only France had reached the halfway point with 51 per cent fulfilled followed by Luxembourg with 43 per cent, Italy 34 per cent and Denmark 32 per cent.

Most other countries had fulfilled between 10 per cent and 30 per cent. Apart from the seven ‘zero’ countries only Lithuania, Latvia and Bulgaria joined Cyprus on the ‘less than 10 per cent’ list. Overall, across the bloc, on average 18 per cent of RRPs have been completed with three years left in the programme.

It should be noted that delays in countries like Belgium might not be a cause for concern to the EU as some RRPs are smaller in scope if domestic laws have already covered certain aspects, laws, and regulations in terms of the environment, digital transition or local government. Cyprus has a wide compendium of reforms to tackle and bigger challenges to overcome in some respects and in terms of expected opposition to some of the measures on the way.

Some of the other most important projects and reforms included in the Cyprus RRP concern, among others, the upgrading of state hospitals, addressing the inadequacies of the property-title system, financing for start-ups and innovators as well as small and medium-sized companies, the creation of a one-stop shop for renewable energy projects, energy upgrading of buildings, as well as financial support for the electricity interconnector with Europe.

With an ambitious agenda and only three years left, it is unlikely the island will complete the remaining 95 per cent of its plan. There is also likely to be public resistance as several of the measures coming down the line will result in increased costs for the individual such as carbon and fuel taxes, a new water tax, increased cost of rubbish collection, emissions-free car zones, and mandatory energy upgrading of private homes.

The Commission’s “mid-term evaluation” this week said sufficient flexibility in the design and implementation of RRPs was necessary to ensure continued added value and smooth implementation.

EU Commission President Ursula von der Leyen said Brussels had set up the recovery facility as a response to the economic and social fallout from the pandemic, though national reform plans were floating around prior to that without the same impetus for implementation. The plans are based on the UN Agenda 2030 programme which world governments have signed on to.

“Three years into its existence, NextGenerationEU continues to support our economic recovery and drives positive change across the EU,” von der Leyen said.  “We have seen funding for energy efficiency, renewable energy and digitalisation projects like never before. NextGenerationEU is tackling national challenges and fast-tracking our common priorities for a green, inclusive, digital, resilient, and competitive EU.”