Cyprus

   

Policy Performance

#39

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 0.4 points relative to 2014.

Spiraling debts and banking-sector weaknesses forced Cyprus to accept an international bailout in 2013, resulting in significant spending and benefit cuts. Subsequent growth has been faster than expected, with deficits falling substantially. However, broader reform progress has been slow, and key social forces have been shut out of the process.

Unemployment rates are dropping, but remain very high. The labor market remains distorted by overlarge and privileged banking and public sectors and a small, weak private sector.

VAT and property taxes have been increased, a special levy on salaries has been imposed, and reforms are underway to increase the efficiency of tax collection more generally. Financial-sector oversight is being significantly strengthened. Achieving consensus on long-term reform remains a key goal.

Social Policies

#27
With a welfare system stretched by the crisis, Cyprus falls into the lower-middle ranks internationally (rank 27) with respect to social policies. Its score in this area has improved by 0.1 point since 2014.

Austerity policies and high unemployment rates have 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. The high-quality public-sector health system shows some access inequities, and has introduced new fees and income tests.

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.

Migrant EU nationals form a large share of the labor force, but little is done to facilitate long-term integration. Non-Cypriots face a significantly higher risk of poverty than do natives, and many have left in recent years.

Environmental Policies

#37
Fragmented and badly coordinated, Cyprus’s environmental policies place it in the bottom ranks internationally (rank 37). 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. Water conservation and overuse of ground water are pressing issues. The crisis is leading to a relaxation of development restrictions, harming ecosystems.

The country has ratified international conventions, and participates in numerous environmental organizations. However, it has failed to meet its EU obligations in this area.

Democracy

#32

Quality of Democracy

#32
With post-crisis reforms prompting political tensions, Cyprus receives a comparatively low overall score (rank 32) 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. Public and media debates have focused unfruitfully on partisan confrontation and assigning blame for the crisis.

Human trafficking has emerged as a serious civil-rights concern. The revelation that security services were using surveillance software failed to trigger widespread debate. The media is increasingly dependent on financial interests, undermining critical reporting.

Political parties control access to appointments and other goods, creating to pressure to join. Anti-corruption measures are not effectively implemented. The crisis has exacerbated discriminatory behavior. Reforms driven by the bailout provisions have sometimes lacked sound legal basis, requiring court intervention.

Governance

#41

Executive Capacity

#41
With planning and oversight deficits having contributed to its financial crisis, Cyprus receives the SGI 2016’s lowest overall score (rank 41) with regard to executive capacity. However, its score in this area has improved by 0.6 points since 2014.

Strategic planning within the core executive, particularly on fiscal matters, has improved as a result of bailout-related reforms. However, administrative units still lack planning capacities. There is no government office with sufficient sectoral expertise to evaluate draft fiscal laws and strategic plans.

Interministerial interaction and coordination has improved. RIA is unsystematic and often superficial. The relevance of consultation with societal actors has been diminished by bailout obligations.

A comprehensive plan for administrative reforms has been passed, but there is no central body tasked with monitoring. The government has performed some bailout-related obligations comparatively efficiently, but with sharply negative impact on many individuals’ welfare.

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 0.2 points since 2014.

Electoral-participation rates have fallen sharply, a sign of plummeting trust in in politicians and institutions. Public awareness of post-crisis adjustment measures has been 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 is responsible to the president. There is no ombuds office, although a Commissioner for Administration serves a comparable role.

Media are 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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