Cyprus

With considerable reform needs remaining despite its recent progress, Cyprus falls into the bottom ranks internationally (rank 37) with regard to economic policies. Its score in this area has improved by 1.1 point relative to 2014.

The pandemic interrupted a period of sustained growth, with GDP shrinking by 5.3% in 2020. However, it rebounded by 5.4% in 2021, with further growth expected. The slow pace of long-overdue reforms has slowed growth as well. Tourism revenues during the pandemic fell to about one-third of 2019 levels, and will require years to recover.

Prior surpluses allowed the government to provide support for businesses during the pandemic. Recipient firms were barred from dismissing workers. The unemployment rate jumped to 8.2%, but fell back to 6.6% in mid-2021. Some sectors face labor shortages. The employment rate among women is far lower than that among men.

The corporate tax rate is being raised to 15%, but tax collection overall is comparatively weak. State debt reached 115.3% of GDP in 2020, but is expected to fall under 100% in 2022. Despite efforts to enhance the regulatory framework, corruption and money laundering remain a problem.

With a number of gaps in its social systems, Cyprus scores relatively poorly in international comparison (rank 30) with respect to social policies. Its score in this area has improved by 0.1 point relative to 2014.

The country launched a new universal healthcare system in 2019. It performed well during the pandemic, with the population experiencing a comparatively low number of deaths. However, financial overruns in the system pose a risk to the public finances.

While education expenditures are high by EU standards, and attainment rates high, outcomes are comparatively poor. The rate of those at risk of poverty and exclusion has continued to decline even during the pandemic, but rates are far higher among non-Cypriots.

Underdeveloped family policies make it difficult for women to combine work with parenthood. Family networks help fill serious gaps in child care. Policies and practices have compounded xenophobic tendencies, and migrants experienced very poor conditions during the pandemic. While the country is generally safe, it is a trafficking destination for forced prostitution and labor.

Given its fragmented and badly coordinated strategies, Cyprus falls into the bottom ranks internationally (rank 37) with regard to environmental policies. Its score on this measure has improved by 0.1 point relative to 2014.

The country has continued to prioritize financial interests over environmental protections, failing to meet EU obligations. Emissions and renewable-energy targets have not been met. Energy policy is focused on green taxation, energy efficiency and renewables, and green mobility. However, limited subsidies mean that transport remains dominated by fossil-fuel-burning cars.

Though water management is a serious issue, water-intensive projects continue to be approved. Desalination continues, with limited reuse of wastewater. Waste generation is a serious problem. Protections for sensitive inland and maritime areas are pending, but projects threatening these areas continue with little impact assessment.

Local and central government officials routinely highlight the important of profit to justify anti-environmental decisions. New projects violating existing rules are routinely approved.

As corruption control becomes an increasing concern, Cyprus receives a comparatively low overall score (rank 33) for democracy quality. Its score in this area has declined by 0.7 points relative to 2014.

Electoral-participation rates have declined, with registration rates very low among young people. A number of recently passed laws regulating political-party financing provide numerous loopholes, and lack transparency. The central government suspended scheduled municipal and communal elections in 2021 to further a municipal reform plan.

Human trafficking and forced labor remain problems. Treatment of asylum-seekers and economic and irregular migrants has drawn international criticism. Officials routinely adopt xenophobic narratives. The government continues to attack and influence the media. A long-delayed law regulating access to government information has gone into force.

State officials frequently exploit excessive discretionary powers, showing limited concern for rule-of-law principles. Court workloads make for very long case durations. Numerous corruption cases have come to light in recent years, and anti-corruption policies are largely toothless.

With numerous gaps in its central planning and strategic capabilities, Cyprus falls into the bottom ranks internationally (rank 40) with regard to executive capacity. However, its score in this area has improved by 1.0 point since 2014.

Implementation of strategic planning has been slow. Line ministers are fully responsible for their ministries, with a Secretariat of the Council of Ministers reviewing proposals on technical grounds. The cabinet and minister of finance have greater control over policies with budgetary implications. Informal coordination is not a regular practice, but was more common during the pandemic.

Most policies with broad impact are not subject to RIA. Ex post assessment is not a part of government practice. Public consultation is limited to a small spectrum of powerful actors. Government communication during the pandemic was routinely contradictory, though the government’s policy response was largely effective.

A municipal reform effort entailing mergers and reorganizations is underway. However, to bypass a requirement for local approval via referendums, the government canceled municipal elections in 2021. Regulatory enforcement is undermined by corruption and political expediency. Support for hydrocarbon exploration has fanned tensions in the region.

With notable monitoring-mechanism shortcomings, Cyprus falls into the bottom ranks internationally (rank 39) in the area of executive accountability. Its score in this area has improved by 0.9 points since 2014.

Electoral-participation rates have plummeted in recent years, along with interest in politics more generally. Trust in politicians and institutions is low. Media reporting is generally of low quality, with little respect for media ethics rules and an increased dependency on financial interests.

While the House of Representatives has substantially upgraded its resources, formal executive-oversight powers remain moderate. The auditor general efficiently exposes abuses of power, to the point of being recently threatened with prosecution by the president. The ombuds office does not advocate sufficiently on behalf of human rights. The data-protection office does not appear to act proactively.

A past shift toward grassroots-level influence in parties has been reversed. Most economic interests focus narrowly on their sectoral demands. Recent momentum gained by civil-society groups has slowed, with issues such as transparency and combating corruption receiving limited response. Government officials have targeted migrant-rights groups with unsubstantiated accusations.