The implementation of the milestones, reforms and investments, of the €1.2-billion Cypriot Recovery and Resilience Plan by the deadline of 2026 is a “huge challenge”, European Commission officials said on Tuesday.

In a discussion with Cypriot journalists, EC officials said that the image portrayed by Cyprus in terms of disbursements from the EU’s Recovery and Resilience Facility (RRF) is “not that good,” as disbursements so far amount to 22% of the €1.2-billion financial envelop compared with 50% of other member-states.

The same official however acknowledged that following contacts with the Cypriot authorities and stakeholders “things are not as bad as they look.”

Cyprus has already submitted a “bundled” payment request for the second and third disbursement, as well as a fourth disbursement application. The EU official said that the second instalment is expected to be disbursed in November. According to the Finance Ministry’s DG Growth, which implements the plan, when these disbursements are approved, total payments will amount to €500 million or around 50% of the total financial envelope.

“Even if the picture looks better, what is clear is that finalising all investment and reforms by 2026 will be a huge challenge,” the official said.

The same official recalled that as opposed to other EU funds, such as Cohesion Funds, the RRF has an “absolute deadline” as no disbursements will be made after 2026 since the Commission is borrowing money from the markets to finance the investments. The RRF was the EU’s response to promote recovery from the Covid-19 pandemic.

According to the same official, the last payment request should be made by August 2026.

Therefore, there is time for one payment request by the end of the year, two next year and one for 2026, he said.

Asked on the challenges, the same official highlighted the reduction of aggressive tax planning, green taxation which she called a delicate issue.  The official noted that aggressive tax planning is a pending issue of the 38 milestones included in the second disbursement.

On investments, she expressed concerns over the aquaculture unit in Pentakomo, due to legal proceedings. “We see a lot of opposition which could derail the deadline,” the official added.

Commission could view equity investment to GSI positively

Replying to a question, the official said the Commission could positively view a Cypriot request to use a €100 million loan included in the Plan as equity investment to the Great Sea Interconnector (GSI) a Special Purpose Vehicle to promote the implementation of the electricity interconnector linking Greece and Cyprus amounting to €1.9 billion.

She said that the Commission has not received such a request but provided there are safeguards that the funds would be used only for this purpose, the Commission could view such a request positively.