04.07.2022
The Cyprus Fiscal Authority has expressed concern over the delays in the implementation of the Cyprus Recovery and Resilience Plan, warning that if further delays occur, it will unfavorably revise economic growth and unemployment forecasts.
In a press release issued on Saturday, the Tax Board noted that “this issue should be treated as urgent.”
The recovery and resilience plan contains a series of reforms and investments related to the allocation of 1.2 billion euros from the EU Next Generation Fund. While the first disbursement of €85 million was scheduled for February this year, implementation of the final precondition, which included granting credit acquiring companies and non-performing loan services access to the guarantor’s financial data, was delayed due to a dispute between the government and parliament.
In its press release, the Council recalled its warning in its interim report published in June that further delays in the recovery plan “would pose significant risks to Cyprus’ macroeconomic performance”.
“The continued delay in the implementation of the Recovery Plan will prompt the Finance Council to unfavorably revise its growth and unemployment forecasts,” the Council warned, noting that this would affect financial performance, albeit to a lesser extent.
The Council predicts that economic growth will reach 2.1% this year. In accordance with its mandate, the Council approves the annual and medium-term macroeconomic forecasts of the Ministry of Finance.
In addition, the Board recalled its previous letter to the Minister of Finance stating that delays in the Restructuring Plan threatened the Ministry of Finance’s forecast of a 5.1% increase in government revenues, with a consequent impact on the primary and fiscal balance of the year.
The Council also recalled that the national reform agenda and the recovery plan are interrelated and underpin economic and public finance projections.
“It is therefore rational that in the event of repeated delays in the implementation of these plans, forecasts for 2022 should be revised downward to reflect less desirable outcomes, mainly in the area of growth and unemployment, and to a lesser extent in relation to public finances,” the Council concluded.
