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EU ministers back Cyprus €1.2 bln Recovery Plan

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EU Finance Ministers have approved Cyprus’ €1.2 bln Recovery and Resilience Plan to exit the pandemic during a scheduled videoconference on Monday.

The government’s proposal is included in the second batch of national recovery and resilience plans sanctioned by the European Commission and awaiting approval from ECOFIN.

The Cyprus plan provides for €1 bln in grants and €200 mln in loans provided by the EU under the Next Generation EU package launched by Brussels to boost the recovery and resilience of members states from the Covid pandemic.

According to the Finance Ministry, these funds are expected to mobilise a further €1.4 bln in private investments, estimated to boost the island’s GDP growth by 7% from 2020 to 2026 and by a cumulative 16.5% over the next 20 years.

It is also estimated the Plan’s implementation will increase employment by 1% in the next two years, 3% over five years and by 6% in the next 20 years.

The disbursements are linked with time-bound reforms, with Cyprus receiving the first instalment of €120 mln.

Furthermore, the Cypriot Plan includes 58 reforms and 76 investment actions, with 41% of the total funds amounting to €505 mln earmarked for green transition and 23% or €282 mln allocated to digital transition.

The EU regulations stipulate that national plans should earmark at least 37% of the total funds to green transition and 20% to digitisation.

Cyprus also intends to reform its electricity market, facilitate the deployment of renewable energy, and enhance connectivity and e-government solutions.

The Recovery and Resilience Facility is the EU’s programme of large-scale financial support in response to the challenges the pandemic has posed to the European economy.

Some €672.5 bln will be used to support the reforms and investments outlined in the member states’ recovery and resilience plans.

The plans have to comply with the 2019 and 2020 country-specific recommendations and reflect the EU’s general objective of creating a greener, more digital and more competitive economy.

Economy and finance ministers also approved the national recovery and resilience plans of Croatia, Lithuania, and Slovenia.