Economic Policies
#37Key Findings
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.
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.
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How successful has economic policy been in providing a reliable economic framework and in fostering international competitiveness?
10
9
9
Economic policy fully succeeds in providing a coherent set-up of different institutional spheres and regimes, thus stabilizing the economic environment. It largely contributes to the objectives of fostering a country’s competitive capabilities and attractiveness as an economic location.
8
7
6
7
6
Economic policy largely provides a reliable economic environment and supports the objectives of fostering a country’s competitive capabilities and attractiveness as an economic location.
5
4
3
4
3
Economic policy somewhat contributes to providing a reliable economic environment and helps to a certain degree in fostering a country’s competitive capabilities and attractiveness as an economic location.
2
1
1
Economic policy mainly acts in discretionary ways essentially destabilizing the economic environment. There is little coordination in the set-up of economic policy institutions. Economic policy generally fails in fostering a country’s competitive capabilities and attractiveness as an economic location.
The strong growth and robust fiscal performance achieved prior to 2020 was abruptly interrupted by the COVID-19 crisis. Reports by the IMF, the ECB and the European Commission, among other institutions, stress that the main risk for the economy is uncertainty regarding the evolution of the pandemic. Other risks and weaknesses also persist. The improvement in the country’s low competitiveness rating in 2019 was followed by a loss of ground in 2020.
EU membership, a strong services sector and favorable taxation system, could have made Cyprus more attractive to investors. The slow pace of long-overdue reforms – including infrastructural upgrades, digitalization, and changes to the education system and legal environment – has been an obstacle.
Some reforms along with efforts to re-establish confidence in the financial system have undermined the financial sector, which is governed by stricter rules today. The banking sector remains fragile, though significantly smaller following the default of two major banks since 2013. At present, major challenges are linked to operational costs, low margins and limited business opportunities.
Affected by the COVID-19 pandemic, economic performance in 2020 and 2021 rested on increased domestic demand. Revenue from tourism declined sharply, down to 35% of 2019 levels, and will need two years to fully recover. Growth is expected to be 5.4% in 2021 and 4.2% in 2022. While confident about the capacity of Cyprus to repay its debt, creditors note risks from the higher costs incurred as a result of the national healthcare scheme (NHS /GESY) and the expansion of KEDIPES (which manages the NPLs of the former state-owned Cyprus Cooperative Bank (CCB) into a national asset management company. They stress the benefits for the economy from realizing long-overdue reforms.
Though more NPLs have been removed from banks, the ratio of NPLs remains high. Despite the increase in public debt, fiscal reserves, and support from European Union’s recovery and resilience fund have mitigated the economy’s vulnerability.
With Cyprus engaged in early campaigning for the February 2023 presidential elections, effective collaboration between the government and the parliament, required in order to promote long-overdue reforms, is doubtful.
Citations:
1. IMF, Cyprus: Cyprus 2021 Article IV Consultation – Press Release and Staff Report, June 2021, https://www.imf.org/-/media/Files/Publications/CR/2021/English/1CYPEA2021001.ashx
2. Cyprus slides down global competitiveness ranking, Financial Mirror, 18 June 2021, https://www.financialmirror.com/2021/06/18/cyprus-slides-down-global-competitiveness-ranking/
3. European Commission, Post_programme Surveillance Report, Cyprus, Autumn 2021, https://ec.europa.eu/info/sites/default/files/economy-finance/ip163_en.pdf
EU membership, a strong services sector and favorable taxation system, could have made Cyprus more attractive to investors. The slow pace of long-overdue reforms – including infrastructural upgrades, digitalization, and changes to the education system and legal environment – has been an obstacle.
Some reforms along with efforts to re-establish confidence in the financial system have undermined the financial sector, which is governed by stricter rules today. The banking sector remains fragile, though significantly smaller following the default of two major banks since 2013. At present, major challenges are linked to operational costs, low margins and limited business opportunities.
Affected by the COVID-19 pandemic, economic performance in 2020 and 2021 rested on increased domestic demand. Revenue from tourism declined sharply, down to 35% of 2019 levels, and will need two years to fully recover. Growth is expected to be 5.4% in 2021 and 4.2% in 2022. While confident about the capacity of Cyprus to repay its debt, creditors note risks from the higher costs incurred as a result of the national healthcare scheme (NHS /GESY) and the expansion of KEDIPES (which manages the NPLs of the former state-owned Cyprus Cooperative Bank (CCB) into a national asset management company. They stress the benefits for the economy from realizing long-overdue reforms.
Though more NPLs have been removed from banks, the ratio of NPLs remains high. Despite the increase in public debt, fiscal reserves, and support from European Union’s recovery and resilience fund have mitigated the economy’s vulnerability.
With Cyprus engaged in early campaigning for the February 2023 presidential elections, effective collaboration between the government and the parliament, required in order to promote long-overdue reforms, is doubtful.
Citations:
1. IMF, Cyprus: Cyprus 2021 Article IV Consultation – Press Release and Staff Report, June 2021, https://www.imf.org/-/media/Files/Publications/CR/2021/English/1CYPEA2021001.ashx
2. Cyprus slides down global competitiveness ranking, Financial Mirror, 18 June 2021, https://www.financialmirror.com/2021/06/18/cyprus-slides-down-global-competitiveness-ranking/
3. European Commission, Post_programme Surveillance Report, Cyprus, Autumn 2021, https://ec.europa.eu/info/sites/default/files/economy-finance/ip163_en.pdf
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How effectively does labor market policy address unemployment?
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9
9
Successful strategies ensure unemployment is not a serious threat.
8
7
6
7
6
Labor market policies have been more or less successful.
5
4
3
4
3
Strategies against unemployment have shown little or no significant success.
2
1
1
Labor market policies have been unsuccessful and rather effected a rise in unemployment.
The labor market benefited from the recovery of the economy in 2021. Unemployment was 6.6% in the third quarter, against 6.5% in mid-2019, and some sectors will face labor shortages in 2022. Support measures linked to the pandemic maintained the rate at 8.2% in fall 2020. The labor force in 2021 comprised 64.6% of the population, against 62.8% in 2019 and 62.9% in 2020. The broader public sector employs 14.8% of the labor force. Per sector employment in 2021 was 17.3% in industry, 2.8% in agriculture and 79.9% in services (79.4% in 2019). In 2021, the NEET indicator for young people (aged 15–29) fluctuated between 14.3% and 16.9% (17.4% in 2018).
During the pandemic, support for businesses came with a clause that prevented them from dismissing personnel. The regulatory framework protects workers from being unlawfully dismissed. However, shortcomings in the implementation of labor rights in recent years have affected “tripartism,” a system of consultation between the state, businesses and employees, leading to tensions in labor relations. Cuts to salaries and pensions imposed since 2011 in the broad public sector will be completely lifted in January 2023. The private sector also suffered severe cuts in salaries and benefits. There are also instances of employment with very low salaries and no social benefits. Labor market distortions persist, with the privileged public and banking sectors “competing” with a relatively weak private sector.
The pandemic unevenly affected groups and sectors of activity, with young persons and women suffering the most. The IMF has recommended active labor market policies to reallocate labor and resources. Mitigating the impact of the pandemic on inequalities would require strengthening family support policies, adjusting education to market needs, and introducing retraining and other measures. To address these issues, authorities need to improve their planning and implementation capacity.
Serious issues of concern include persistently high rates of youth unemployment (14.5% against 14.9% in 2019) and long-term unemployment (2.2%, same as in 2019). Meanwhile, problems exist in employment status – the short-term rate is 13.1% against 15% in 2019, and part-time rate is 10.2% against 11.5% in 2019.
Women are affected slightly more than men. Only 59% of women participate in the formal labor force and 54.8% were employed in the third quarter of 2021, compared to 70.6% and 66.3% for men.
Migrant workers, who comprise 21.9% of the employed workforce (11.2% other-EU migrants and 10.7% non-EU migrants), remain the most vulnerable group and are often exploited by employers, which negatively affects their economic situation.
Citations:
1. Labour Force Survey, Q3-2021, Statistical Service ROC, 2021 https://www.cystat.gov.cy/en/PressRelease?id=64815
2. IMF, Cyprus: Cyprus 2021 Article IV Consultation – Press Release and Staff Report, June 2021, https://www.imf.org/-/media/Files/Publications/CR/2021/English/1CYPEA2021001.ash x
During the pandemic, support for businesses came with a clause that prevented them from dismissing personnel. The regulatory framework protects workers from being unlawfully dismissed. However, shortcomings in the implementation of labor rights in recent years have affected “tripartism,” a system of consultation between the state, businesses and employees, leading to tensions in labor relations. Cuts to salaries and pensions imposed since 2011 in the broad public sector will be completely lifted in January 2023. The private sector also suffered severe cuts in salaries and benefits. There are also instances of employment with very low salaries and no social benefits. Labor market distortions persist, with the privileged public and banking sectors “competing” with a relatively weak private sector.
The pandemic unevenly affected groups and sectors of activity, with young persons and women suffering the most. The IMF has recommended active labor market policies to reallocate labor and resources. Mitigating the impact of the pandemic on inequalities would require strengthening family support policies, adjusting education to market needs, and introducing retraining and other measures. To address these issues, authorities need to improve their planning and implementation capacity.
Serious issues of concern include persistently high rates of youth unemployment (14.5% against 14.9% in 2019) and long-term unemployment (2.2%, same as in 2019). Meanwhile, problems exist in employment status – the short-term rate is 13.1% against 15% in 2019, and part-time rate is 10.2% against 11.5% in 2019.
Women are affected slightly more than men. Only 59% of women participate in the formal labor force and 54.8% were employed in the third quarter of 2021, compared to 70.6% and 66.3% for men.
Migrant workers, who comprise 21.9% of the employed workforce (11.2% other-EU migrants and 10.7% non-EU migrants), remain the most vulnerable group and are often exploited by employers, which negatively affects their economic situation.
Citations:
1. Labour Force Survey, Q3-2021, Statistical Service ROC, 2021 https://www.cystat.gov.cy/en/PressRelease?id=64815
2. IMF, Cyprus: Cyprus 2021 Article IV Consultation – Press Release and Staff Report, June 2021, https://www.imf.org/-/media/Files/Publications/CR/2021/English/1CYPEA2021001.ash x
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How effective is a country’s tax policy in realizing goals of revenue generation, equity, growth promotion and ecological sustainability?
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9
9
Taxation policy fully achieves the objectives.
8
7
6
7
6
Taxation policy largely achieves the objectives.
5
4
3
4
3
Taxation policy partially achieves the objectives.
2
1
1
Taxation policy does not achieve the objectives at all.
Strengthening tax collection and processing mechanisms (e.g., auditing), as well as fighting tax evasion and avoidance remain unfulfilled goals.
The present tax system, introduced in 2001, is comparatively uncomplicated, both with respect to individual provisions and structure. Direct and social taxes yield relatively little revenue, because of a high threshold of taxable income offset at €19,500. This results in a low tax burden on labor and an increased dependency on corporate and value-added taxes. A levy on salaries and a real-property tax imposed in 2013 were terminated in 2017, while a levy of 30% on interest income from bank deposits remains in force.
The COVID-19 crisis highlighted problems, including the high reliance on corporate and value-added taxes on non-sustainable activities, which may not guarantee sufficient financial resources in the long run. The pandemic also affected tax income, which compounded tax collection problems and meant a large proportion of overdue taxes remained uncollected. Clearance of tax declarations faces many-years-long delays.
Tax equity is to some extent achieved through the progressive increase in individual income-tax rates from 20% to 35%. However, widespread tax evasion and tax avoidance, and a flat rate of 12.5% for companies are negatively affecting equity. They allow aggressive tax planning, and benefit liberal professions and highly profitable companies. The IMF and the European Commission stress the need for a revised tax system.
Corporate tax will be raised to 15%, but plans to support companies via other measures will maintain the imbalance in tax equity. Broader changes to the tax system have been agreed, including green taxes, and rebates on the basis of the Recovery and Resilience Plan. The latter will benefit climate and environmental policies, which is a problematic area.
Citations:
1. European Commission, Council Recommendation, on the 2020 National Reform Programme of Cyprus…, May 2020, Brussels, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0513&from=EN
2. IMF, Cyprus: Cyprus 2021 Article IV Consultation – Press Release and Staff Report, June 2021, https://www.imf.org/-/media/Files/Publications/CR/2021/English/1CYPEA2021001.ash x
The present tax system, introduced in 2001, is comparatively uncomplicated, both with respect to individual provisions and structure. Direct and social taxes yield relatively little revenue, because of a high threshold of taxable income offset at €19,500. This results in a low tax burden on labor and an increased dependency on corporate and value-added taxes. A levy on salaries and a real-property tax imposed in 2013 were terminated in 2017, while a levy of 30% on interest income from bank deposits remains in force.
The COVID-19 crisis highlighted problems, including the high reliance on corporate and value-added taxes on non-sustainable activities, which may not guarantee sufficient financial resources in the long run. The pandemic also affected tax income, which compounded tax collection problems and meant a large proportion of overdue taxes remained uncollected. Clearance of tax declarations faces many-years-long delays.
Tax equity is to some extent achieved through the progressive increase in individual income-tax rates from 20% to 35%. However, widespread tax evasion and tax avoidance, and a flat rate of 12.5% for companies are negatively affecting equity. They allow aggressive tax planning, and benefit liberal professions and highly profitable companies. The IMF and the European Commission stress the need for a revised tax system.
Corporate tax will be raised to 15%, but plans to support companies via other measures will maintain the imbalance in tax equity. Broader changes to the tax system have been agreed, including green taxes, and rebates on the basis of the Recovery and Resilience Plan. The latter will benefit climate and environmental policies, which is a problematic area.
Citations:
1. European Commission, Council Recommendation, on the 2020 National Reform Programme of Cyprus…, May 2020, Brussels, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0513&from=EN
2. IMF, Cyprus: Cyprus 2021 Article IV Consultation – Press Release and Staff Report, June 2021, https://www.imf.org/-/media/Files/Publications/CR/2021/English/1CYPEA2021001.ash x
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To what extent does budgetary policy realize the goal of fiscal sustainability?
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9
9
Budgetary policy is fiscally sustainable.
8
7
6
7
6
Budgetary policy achieves most standards of fiscal sustainability.
5
4
3
4
3
Budgetary policy achieves some standards of fiscal sustainability.
2
1
1
Budgetary policy is fiscally unsustainable.
The Law on Fiscal Responsibility and Fiscal Framework of 2014 provided budget design and implementation processes that meet the government’s strategic targets. This required the administration to gradually acquire strategic planning capacities. Positive results were achieved, with large fiscal surpluses and a reduction in the public debt. The good performance of the previous years, assisted by tax, tourism and other buoyant revenues was interrupted by the pandemic. However, surpluses helped the authorities to face the repercussions of the pandemic by providing support to businesses and people.
Praise for the country’s economic performance in surveillance reports also included warnings, for example, not to loosen strict fiscal discipline and to promote structural reforms to enhance spending reviews.
The 2022 budget aims to consolidate economic recovery and growth, and reduce the public debt below 100% of GDP. Officials have referred to it as “the budget for reforms and a green economy.” Concerns are linked to uncertainty around the development of the pandemic and its impact, among other things, on the national healthcare system, GESY. GESY is a source of worry, as expenses have exceeded initial estimates.
GDP was expected to grow by 5.4% in 2021 compared to a contraction of 5.3% in 2020. The debt-to-GDP ratio was expected to recede to 104.1% in 2021 and 97.6% in 2022, against 115.3% in 2020.
Citations:
1. European Commission, Council Recommendation, on the 2020 National Reform Programme of Cyprus…, May 2020, Brussels, https://eur-lex.europa.eu/legal-con tent/EN/TXT/PDF/?uri=CELEX:52020DC0 513&from=EN
2. IMF, Cyprus: Cyprus 2021 Article IV Consultation – Press Release and Staff Report, June 2021, https://www.imf.org/-/media/Files/Publications/CR/2021/English/1CYPEA2021001.ash x
3. Green transition deal will be painful for some warns minister, Cyprus Mail, 23 October 2021,
https://cyprus-mail.com/2021/10/23/green-transition-deal-will-be-painful-for-some-warns-minister/
Praise for the country’s economic performance in surveillance reports also included warnings, for example, not to loosen strict fiscal discipline and to promote structural reforms to enhance spending reviews.
The 2022 budget aims to consolidate economic recovery and growth, and reduce the public debt below 100% of GDP. Officials have referred to it as “the budget for reforms and a green economy.” Concerns are linked to uncertainty around the development of the pandemic and its impact, among other things, on the national healthcare system, GESY. GESY is a source of worry, as expenses have exceeded initial estimates.
GDP was expected to grow by 5.4% in 2021 compared to a contraction of 5.3% in 2020. The debt-to-GDP ratio was expected to recede to 104.1% in 2021 and 97.6% in 2022, against 115.3% in 2020.
Citations:
1. European Commission, Council Recommendation, on the 2020 National Reform Programme of Cyprus…, May 2020, Brussels, https://eur-lex.europa.eu/legal-con tent/EN/TXT/PDF/?uri=CELEX:52020DC0 513&from=EN
2. IMF, Cyprus: Cyprus 2021 Article IV Consultation – Press Release and Staff Report, June 2021, https://www.imf.org/-/media/Files/Publications/CR/2021/English/1CYPEA2021001.ash x
3. Green transition deal will be painful for some warns minister, Cyprus Mail, 23 October 2021,
https://cyprus-mail.com/2021/10/23/green-transition-deal-will-be-painful-for-some-warns-minister/
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To what extent does research and innovation policy support technological innovations that foster the creation and introduction of new products?
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9
9
Research and innovation policy effectively supports innovations that foster the creation of new products and enhance productivity.
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6
7
6
Research and innovation policy largely supports innovations that foster the creation of new products and enhance productivity.
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3
4
3
Research and innovation policy partly supports innovations that foster the creation of new products and enhance productivity.
2
1
1
Research and innovation policy has largely failed to support innovations that foster the creation of new products and enhance productivity.
An upgraded effort to boost research and development was initiated in 2019. The European Union suggests that a major challenge is to strike a balance between spending on R&D, which lies mainly with higher education, and promoting cooperation between universities and businesses. Nevertheless, Cyprus ranks first among EU member states in terms of the amount of funding per capita the country has received from Horizon 2020.
After shaping a new research and innovation policy framework in 2019, under the National Council for Research and Innovation, the government established the Deputy Ministry for Research, Innovations and Digital Policy. The new institution is tasked with shaping and implementing policies on research and digitalization.
While Cyprus’s position in the Global Competitiveness Index declined in 2021, after improving in the previous year, the country ranked second in the European Union’s 2021 scoreboard for progress achieved in R&I.
In addition, the R&D expenditure target of 0.5% of GDP for 2020 was surpassed (0.85%), with the target revised to 1.5% of GDP for 2023.
Citations:
1. Council Recommendation on the 2020 National Reform Programme of Cyprus… 2020, May 2020, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0513&from=EN
2. Eurostat, Gross domestic expenditure on R&D (GERD), update 14 December 2021, https://ec.europa.eu/eurostat/web/products-datasets/-/t2020_20
After shaping a new research and innovation policy framework in 2019, under the National Council for Research and Innovation, the government established the Deputy Ministry for Research, Innovations and Digital Policy. The new institution is tasked with shaping and implementing policies on research and digitalization.
While Cyprus’s position in the Global Competitiveness Index declined in 2021, after improving in the previous year, the country ranked second in the European Union’s 2021 scoreboard for progress achieved in R&I.
In addition, the R&D expenditure target of 0.5% of GDP for 2020 was surpassed (0.85%), with the target revised to 1.5% of GDP for 2023.
Citations:
1. Council Recommendation on the 2020 National Reform Programme of Cyprus… 2020, May 2020, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0513&from=EN
2. Eurostat, Gross domestic expenditure on R&D (GERD), update 14 December 2021, https://ec.europa.eu/eurostat/web/products-datasets/-/t2020_20
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To what extent does the government actively contribute to the effective regulation and supervision of the international financial architecture?
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9
The government (pro-)actively promotes the regulation and supervision of financial markets. It demonstrates initiative and responsibility in such endeavors and often acts as an international agenda-setter.
8
7
6
7
6
The government contributes to improving the regulation and supervision of financial markets. In some cases, it demonstrates initiative and responsibility in such endeavors.
5
4
3
4
3
The government rarely contributes to improving the regulation and supervision of financial markets. It seldom demonstrates initiative or responsibility in such endeavors.
2
1
1
The government does not contribute to improving the regulation and supervision of financial markets.
Effective monitoring of the market and compliance with international standards remain major challenges for Cyprus. Despite taking measures to enhance the regulatory framework, the government’s policies to attract foreign investors have been undermined by corruption. The work conducted by the Securities and Exchange Commission, and the Unit for Combating Money Laundering (MOKAS) has been ineffective in serious cases of money laundering and corruption.
Amendments to laws on money laundering and terrorism-related activities that aimed to align with EU directives have strengthened the deterrence regime. Among new measures adopted is the seizing of property acquired through unlawful activities. Since January 2017, Cyprus is a signatory to the Common Reporting Standard for information exchange.
Bank-oversight mechanisms have been enhanced to avoid transgressions, such as the failure to follow rules governing large exposures, and minimum capital and liquidity. Various laws related to the resolution of NPL-related challenges have been adopted, but with limited impact so far.
The government denied any wrongdoing following the European Commission’s Report on Investor Citizenship and Residence Schemes in the European Union (2019), as well as media reports by Reuters (October 2019) and Al Jazeera’s Cyprus Papers (August 2020) reveal serious corruption linked with selling passports. Even after officially stopping the scheme, authorities continued to sell passports.
Citations:
1. Investor citizenship schemes: European Commission opens infringements against Cyprus and Malta for “selling” EU citizenship, October 2020, https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1925
2. Masis De Parthog, Lack of transparency helps corruption spread, Financial Mirror, 18 October 2020, https://www.financialmirror.com/2020/10/18/lack-of-transparency-helps-corruption-spread/
3. Jean Christou, Brussels tells Cyprus to stop processing pending citizenship applications, Cyprus Mail, 9 June 2021, https://cyprus-mail.com/2021/06/09/brussels-tells-cyprus-and-malta-stop-selling-eu-citizenship-launches-further-procedures/
Amendments to laws on money laundering and terrorism-related activities that aimed to align with EU directives have strengthened the deterrence regime. Among new measures adopted is the seizing of property acquired through unlawful activities. Since January 2017, Cyprus is a signatory to the Common Reporting Standard for information exchange.
Bank-oversight mechanisms have been enhanced to avoid transgressions, such as the failure to follow rules governing large exposures, and minimum capital and liquidity. Various laws related to the resolution of NPL-related challenges have been adopted, but with limited impact so far.
The government denied any wrongdoing following the European Commission’s Report on Investor Citizenship and Residence Schemes in the European Union (2019), as well as media reports by Reuters (October 2019) and Al Jazeera’s Cyprus Papers (August 2020) reveal serious corruption linked with selling passports. Even after officially stopping the scheme, authorities continued to sell passports.
Citations:
1. Investor citizenship schemes: European Commission opens infringements against Cyprus and Malta for “selling” EU citizenship, October 2020, https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1925
2. Masis De Parthog, Lack of transparency helps corruption spread, Financial Mirror, 18 October 2020, https://www.financialmirror.com/2020/10/18/lack-of-transparency-helps-corruption-spread/
3. Jean Christou, Brussels tells Cyprus to stop processing pending citizenship applications, Cyprus Mail, 9 June 2021, https://cyprus-mail.com/2021/06/09/brussels-tells-cyprus-and-malta-stop-selling-eu-citizenship-launches-further-procedures/