Cyprus

   

Policy Performance

#38

Economic Policies

#39
Despite bright spots in its crisis management, Cyprus falls into the bottom ranks internationally (rank 39) with regard to economic policies. Its score in this area has improved by 0.7 points relative to 2014.

After exiting its bailout program in 2016, Cyprus remains under European Stability Mechanism surveillance. The agreement resulted in a downsized and stabilized financial sector, but future policy tasks include reforming the public sector, improving handling of non-performing loans and privatizing the electricity market.

Growth is moderate, driven by tourism and private consumption. Unemployment rates are still high, but falling consistently. Youth unemployment rates are very high.

The tax bureaucracy has been rationalized, improving collection. Evasion remains a problem. A special levy on salaries is expected to end in 2017. Budgets have focused on deficit and debt reductions, in part through reducing public-sector spending. A positive primary fiscal balance has helped marginally reduce unsustainable debt levels.

Social Policies

#29
With a welfare system stretched by the crisis, Cyprus falls into the lower-middle ranks internationally (rank 29) with respect to social policies. Its score in this area has improved by 0.2 points since 2014.

Austerity policies and high unemployment rates have dramatically increased the risk of poverty and exclusion, though targeted aid and a means-tested guaranteed-minimum-income policy are helping many households, especially among the elderly. While health care quality can be high, the public sector shows access inequities, and private coverage is inadequate.

Family networks supplement underdeveloped family policies. The labor-force participation rate for women is high. Improved pension benefits have reduced elderly citizens’ risk of poverty, but public employees fare better than private-sector workers. Retirement ages have been increased.

Migrant EU nationals form a large share of the labor force, but no comprehensive integration policy is in place. Non-Cypriots face a significantly higher risk of poverty than do natives, and many have left in recent years.

Environmental Policies

#35
With fragmented and badly coordinated strategies, Cyprus scores relatively poorly (rank 35) with regard to environmental policies. Its score on this measure is unchanged since 2014.

The country lacks a comprehensive environmental policy. Use of solar energy is rising, but progress in renewable-resource use more generally has been slow. Energy consumption levels are high. Water conservation and overuse of ground water are pressing issues. Government authorities and private developers promote development at the expense of environmental protection.

The country has ratified international conventions, and participates in numerous environmental organizations. However, it has failed to meet its EU obligations in this area, and officials have asked for exemptions from EU environmental-protection rules.

Democracy

#31

Quality of Democracy

#31
With post-crisis reforms prompting political tensions, Cyprus receives a comparatively low overall score (rank 31) for democracy quality. Its score in this area has declined by 0.2 points relative to 2014.

Mandatory-voting laws are no longer enforced, and electoral-participation rates have declined. Voting rights in European elections have been extended to Turkish Cypriots, but response has been limited. A number of new laws regulate political-party financing, but loopholes remain, and compliance has not yet been full.

Human-trafficking problems are being successfully addressed. Treatment of asylum-seekers and economic migrants has drawn criticism. The recent revelation that security services were using surveillance software failed to trigger widespread debate. The media is increasingly dependent on financial interests, undermining critical reporting.

A civil-partnership law was adopted in 2015. Critics note that the crisis has otherwise exacerbated discriminatory behavior. Numerous cases of corruption have emerged in recent years, but a new anti-corruption strategy is being developed. Reforms driven by the bailout provisions have sometimes lacked sound legal basis, requiring court intervention.

Governance

#41

Executive Capacity

#41
Despite some planning improvements since the onset of crisis, Cyprus receives the SGI 2017’s lowest overall score (rank 41) with regard to executive capacity. However, its score in this area has improved by 0.9 points since 2014.

Post-crisis reforms seek to make strategic planning a key element of administrative practices. There is no government office with sufficient sectoral expertise to evaluate draft fiscal laws and strategic plans. Line ministries draft bills, which are approved by the Council of Ministers. The finance minister has been given decision-making power on budgetary proposals.

Discord between parties and political actors has been more common than coordination. An improved RIA system will go into effect in 2017. Civil-society groups and unions have lost influence during the crisis period, and what external consultation does take place is not transparent.

Disputes over government competences have disrupted communication coherency. While the government did stabilize crisis conditions, long-term reforms have yet to be addressed. Tensions between ministries, parties, and the parliament have undermined effective monitoring and delayed or diluted reforms.

Executive Accountability

#39
With notable monitoring-mechanism gaps, Cyprus falls into the bottom ranks internationally (rank 39) in the area of executive accountability. Its score in this area has improved by 0.1 point since 2014.

Electoral-participation rates have fallen sharply, a sign of plummeting trust in politicians and institutions. Public awareness of post-crisis adjustment measures was initially strong, but growing alienation threatens to undermine the population’s previous reluctant support for difficult measures.

Parliamentarians have comparatively few resources, and their formal executive-oversight powers are quite limited. The audit office has gained increasing authority over time. There is no ombuds office, although a Commissioner for Administration serves a comparable role.

Media coverage is often biased, and publications’ increasing dependence on financial interests has influenced coverage. Trade unions and employers’ organizations are strong, and typically seek consensual solutions. A number of civil-society groups have emerged to address crisis-related issues, with growing impact despite their limited overall appeal.
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