The European Commission recommends that Cyprus speeds up the implementation of its recovery and resilience plan by reducing reliance on fossil fuels and developing electricity interconnections.
The country-specific recommendations in the 2023 European Semester Spring Package focuses on what needs to be done for member states to build a robust and future-proof economy that secures competitiveness and prosperity in a challenging geopolitical environment.
Among other elements included in the package, the Commission assessed the existence of macroeconomic imbalances for the 17 Member States, including Cyprus, selected for in-depth reviews in the 2023 Alert Mechanism Report.
Regarding the post-programme surveillance report issued for Cyprus (along with those for Ireland, Greece, Spain and Portugal), the Commission finds that Cyprus and the other countries that have benefited from financial assistance programmes retain the capacity to repay their debt.
Recommendations proposed by the European Commission to Cyprus for 2023-2024 are:
- Wind down the energy support measures in force by the end of 2023.
Should renewed energy price increases necessitate support measures, ensure that these are targeted at protecting vulnerable households and firms, fiscally affordable, and preserve incentives for energy savings.
Maintain a sound fiscal position in 2024, preserving nationally financed public investment and ensuring the effective absorption of RRF grants and other EU funds to foster green and digital transitions.
Facilitate the reduction of private debt, including by implementing an effective foreclosure framework.
For the period beyond 2024, continue to pursue investment and reforms conducive to higher sustainable growth and preserve a prudent medium-term fiscal position.
- Accelerate the implementation of its recovery and resilience plan, ensuring an adequate administrative capacity, and swiftly finalise the REPowerEU chapter to start its implementation rapidly.
Furthermore, proceed with the speedy implementation of cohesion policy programmes in close complementarity and synergy with the recovery and resilience plan.
- Take measures to improve the governance of state-owned entities in line with international standards
- Reduce reliance on fossil fuels and diversify the energy supply.
To better exploit all untapped potential for renewable energy generation, accelerate renewables deployment by using suitable economic instruments and making further investments to upgrade and modernise the electricity grid, including energy storage facilities.
Speed up the development of electricity interconnections.
Extend and accelerate energy efficiency measures, also to address energy poverty, as well as the shift towards sustainable transport.
In addition, step up policy efforts aimed at the provision and acquisition of the skills needed for the green transition.