Nicosia, Cyprus. Cyprus risks losing tens of millions of euros from the European Union’s recovery and resilience fund after auditors found deficiencies in planning and delayed implementation. The audit office said the shortfalls have left Cyprus behind most EU member states as deadlines approach.
Audit findings on absorption and progress
In its assessment of Cyprus’ €1.02 billion recovery and resilience plan, the audit office said that by August 2025 the country had absorbed 56 per cent of available grant funding, or €567.7 million, including €151.67 million in pre-financing.
The recovery and resilience fund totals €723.8 billion across the EU and was created to help member states address the economic impact of the pandemic while advancing green and digital transitions.
Based on EU monitoring data, Cyprus ranks 20th out of 27 member states for absorption of non-repayable financial support, placing it among the lowest performers with the August 2026 completion deadline approaching.
Risk of suspension linked to green taxation reform
The audit office said there is a direct risk of financial loss, with up to €50 million in grants potentially subject to suspension by the European Commission due to delays in implementing green taxation reform.
The commission has indicated that failure to meet the specific milestone would result in a permanent reduction of funding and could damage Cyprus’ credibility. The audit office warned that such an outcome would “create a negative image for Cyprus as a partner in fulfilling its obligations towards the EU”.
Concerns over plan design and administrative capacity
The report concluded that the plan’s original design in 2021 was “overly optimistic and rife with weaknesses”.
Cyprus committed to 133 measures, including 75 investments and 58 reforms, which the audit office described as disproportionately large relative to the country’s size and administrative capacity.
The audit office said milestones and targets were highly detailed and, in many cases, excessively specific, complicating implementation.
How do you think Cyprus should prioritise reforms to meet EU milestones before the August 2026 deadline?
