The Republic of Cyprus is racing against time for the implementation of all the prerequisite decisions – measures of the Recovery Fund, which it committed to the European Commission to implement within the timetables, in order to disburse the amount of €1.02 billion.
Cyprus has disbursed 56% of European funds and has four months to reach the milestones and secure the remaining grant amounts. The Cyprus plan includes 128 measures, as well as 222 milestones, of which 61 concern reforms and 67 investments.
By the end of August, the member states of the European Union will have to complete all the projects, reforms and actions included in their national plans, so that on December 31 they will receive the funding that corresponds to them.
Recently, European Commissioner for Economy and Productivity Valdis Dombrovskis said that the recovery mechanism will not be extended, stressing that the targets must be achieved by the end of August, while payment requests should be submitted by the end of September.
At the same time, the Commission appears cautious about proposals to extend the repayment of the common European debt and clarifies that the Recovery Fund is a "disposable tool". In fact, it declares that any change in the existing framework would require a new political decision by the member states.
It is noted that the issue was also discussed at the informal meeting of EU leaders in Cyprus, during which the idea of refinancing the debt of the Recovery Fund was discussed, in view of the start of repayments from 2028, amounting to approximately €25 billion per year. However, there have been strong reactions from Germany.
56% of the funds disbursed
As far as Cyprus is concerned, it has so far collected €589 million through the Recovery Plan, out of the total amount of €1.02 billion. It is worth noting that the amount collected concerns the first five instalments and part of the 6th instalment. Our country has submitted seven payment requests to the European Commission out of the nine instalments of the sponsorship. The collection of an additional amount in excess of €150 million, which concerns the 6th and 7th instalments, is pending.
At the same time, it remains to submit Cyprus' requests for the last two instalments, through which the remaining €274 million will be collected, with the completion of all investments and reforms of the Plan within 2026.
A competent source told "F" that the last two requests include 85 milestones, of which 35 to 40 have almost been completed. As we were told, more than 1/3 of the prerequisites of the 8th and 9th instalments have been completed and 45 milestones remain, which mainly concern projects that are in the final stage and are estimated to be completed by the end of June.
What will pass through the Parliament
In the context of the last two tranches, the Parliament will have to approve two pieces of legislation concerning the imposition of a landfill tax, as well as the establishment of a Cyprus Development Agency.
The first bill has already been submitted to Parliament and will have to be approved by the new Parliament immediately after the elections. The landfill tax for municipal waste until December 31, 2027 will be €10 per ton. From January 1, 2028, the tax will increase by €5 per ton, for municipal waste that ends up in landfill, with a maximum amount of €70 per ton of municipal waste.
It is noted that the tax will be paid to the Local Government Authorities to the landfill manager and will then be paid to the Ministry of Agriculture. The revenues from the tax will function in return, as compensatory measures, to finance investments, subsidies, sponsorships and activities of the Local Government Authorities for the management of municipal waste. They concern investments in facilities, equipment and services for municipal solid waste management that promote the circular economy.
– The second piece of legislation provides for the establishment of a Business Development Agency, including the appointment of the Board of Directors. The legislative technical review of the bill is expected to be completed soon, so that it can make its way to Parliament. As it seems, the new Parliament, as soon as it begins its work, will be called upon to discuss the bill as soon as possible, so that before the Parliament closes for the summer holidays, it will approve it.
It is noted that officials of the General Directorate of Development are going to the projects on the spot and monitoring their progress.
No risk
A competent source said that there is no risk of losing European resources from the Recovery Fund, noting that there will be a high absorption rate of the funds.
The Republic will submit the last two requests by the end of September. An EU team is expected to visit our country in May and it is possible that targeted small changes to the Plan will be at the center. However, the EU also believes that the Cyprus plan will be completed successfully.
When was the Recovery Mechanism implemented?
The Recovery Mechanism was put in place to address the economic and social impact of the coronavirus pandemic, sustainable growth and ensure the resilience of the EU economy.
In 2020, the European Commission created an extraordinary and temporary instrument to finance the EU's recovery and exit from the crisis, called Next Generation EU with a total budget of €750 billion, under the new Multiannual Financial Framework 2021-2027.
Cyprus, like the other Member States, has prepared the proposal for the National Recovery and Resilience Plan, the implementation of which must be completed by August 2026. The proposal for the national plan was submitted in May 2021 and after a positive evaluation by the European Commission it was approved by ECOFIN in July 2021.
The national plans needed to be designed immediately and implemented in a timely manner to address the effects of the pandemic and recover the economies of the Member States. Cyprus has made amendments to ensure the successful completion of the Plan and to collect the total grant of €1.02 billion.
