Filenews 27 September 2021 - byAndreas Theophanous
There is no doubt that Cyprus is facing serious socio-economic challenges. While the country was trying to recover and heal its wounds from the economic collapse of 2013, the health crisis that has also hit Cyprus since March 2020 created new economic consequences and unprecedented conditions. The EU has suspended tough rules of fiscal discipline to deal with the worst economic crisis since World War II. Cyprus has tried to reduce the negative socio-economic consequences through an expansionary fiscal policy.
At the current juncture, and while the duration of the pandemic cannot be predicted, the state is called upon to proceed with the necessary reforms. Some of them are the following:
The reform of Local Government is a long-standing issue. Perpetuating the system as it stands entails serious financial costs which will inevitably lead to higher taxation. Despite opposition, it is important to move forward with the reform which entails a smaller number of municipalities and lower costs. The aim is to upgrade the quality of services, as well as to reduce costs for local government.
The reform of the Judiciary is urgent. While several steps forward have been made, there is a widespread impression that much more needs to be done in order to deliver justice in a timely manner. Time-consuming procedures damage the credibility of the institution and at the same time create several distortions in public life. It is also important to restore the prestige of the institution as Cyprus must tackle corruption.
During the previous crisis, Cyprus was told by the EU institutions that it should decisively address all excesses of government spending. And while several steps were initially taken, at the current juncture it appears that some principles have not been established. Among other things, the pension system and the state payroll should be reassessed. It is also necessary to review expenditure on education, research and its efficiency.
In relation to the GHS, a question that arises is whether it is possible to maintain a high level of services with the existing costs. The System must be continuously evaluated and any distortions adequately addressed. Surely there is room for savings without discounts on the quality of services. These must be identified and the appropriate actions must be taken.
In the field of education, the need for change is glaring. Among other things, it is noted that the performance of secondary school students at various levels has been troubling in recent years. In relation to Higher Education, it must be understood that the relatively large number of universities does not contribute to the creation of the necessary critical mass. The state could have a comprehensive policy that includes incentives to merge private universities. Ideas in this direction have been on the table for a long time. Among other things, the state can announce a policy of financial support for universities with various criteria, including a certain threshold of student numbers as well as the presence of valuable research work. In addition, the level of technical education, which is obviously also linked to the needs of the economy, should be upgraded.
It is also crucial to re-evaluate the economy as a whole and to promote new drivers of economic growth. The prospect of transforming Cyprus into an academic and medical centre has been mentioned on many times. While significant progress has been made, much more can be done to further upgrade these areas. In addition, it is noted that, while in recent years the primary and secondary sectors have shrunk, it is possible to re-evaluate some activities that contribute to the production of products and services of high added value.
For years there has been talk of actions friendly to green growth. There is great potential in the field of energy in particular. In addition, it is important to incorporate new ideas and approaches into the new buildings that are being built.
At the same time, it is crucial to have an effective public administration which will make a substantial contribution to this. It is also underlined that the greatest possible use of European funds requires significant reforms and changes in almost all aspects of public life. The Recovery and Resilience Plan of Cyprus, through which the Republic of Cyprus can draw €1.2 billion from the EU by 2026, is a very good opportunity, but not a panacea. These changes presuppose political will and willingness for the country to proceed unhindered towards the realization of its goals.
*Professor, President of the Cyprus Centre for European and International Affairs as well as of the Department of Political Science and Governance of the University of Nicosia.
