Policy Performance


Economic Policies

Despite significant progress as it leaves crisis behind it, Cyprus falls into the bottom ranks internationally (rank 38) with regard to economic policies. Its score in this area has improved by 1.0 point relative to 2014.

Cyprus exited its bailout program in 2016, with subsequent reports continuing to point to the success of restructuring policies. However, confidence in the economy remains low overall. While the financial sector has been stabilized, the country is seeking a new model enabling it to recover its role as an attractive investment center.

Growth has returned to moderately high levels, driven by tourism, large construction projects and private consumption. Unemployment rates have fallen substantially, but remain well above pre-crisis levels. Youth unemployment remains a problem. Political conflicts and policy reversals continue to stymie reform projects.

Tax evasion and avoidance remain problems. The tax system plays very little redistributive role. Recent budgets have focused on deficit and debt reductions, in part through reducing public-sector spending. Fiscal surpluses have helped reduce very high public debt levels.

Social Policies

With a welfare system stretched by the aftereffects of crisis, Cyprus falls into the lower-middle ranks internationally (rank 29) with respect to social policies. Its score in this area is unchanged relative to 2014.

The rate of those at risk of poverty and exclusion is declining, after a sharp rise due to austerity policies and high unemployment rates. Targeted aid and a means-tested guaranteed-minimum-income policy are helping many needy households. While health care quality is often high, the public sector shows access inequities, and private coverage is inadequate.

Although the labor-force participation rate for women is high, underdeveloped family policies make it difficult for women to combine work with parenthood. Family networks help fill child-care gaps. 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 no comprehensive integration policy is in place. Government officials have publicly stated their support for prioritizing the employment of Cypriots.

Environmental Policies

With fragmented and badly coordinated strategies, Cyprus falls into the bottom ranks internationally (rank 38) with regard to environmental policies. Its score on this measure has improved by 0.1 point since 2014.

Despite local and international pressures, the country has failed to meet EU environmental obligations. The realization of CO2-reduction plans will require very significant action. The economic crisis has been used as a pretext for the relaxation of environmental rules, with new development projects threatening ecosystems.

Water management is a serious issue, with illegal water drilling and water-intensive development projects undermining progress. The EU has additionally threatened sanctions if waste-management problems remain unresolved.

The country has ratified international conventions, and participates in numerous environmental organizations. However, officials have asked for exemptions from EU environmental-protection rules.



Quality of Democracy

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.

Voting is no longer mandatory, 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 the auditor general has noted problems that limit the efficacy of oversight.

Human-trafficking is a serious problem, with actions on the issue failing to meet international standards. Treatment of asylum-seekers and economic and irregular migrants has drawn criticism. The media is increasingly dependent on financial interests, undermining critical reporting.

Legal certainty is undermined by governmental and administrative delays in action. Clientelistic appointment practices undermine state bodies’ independence. While government transparency has improved, the anti-corruption body is understaffed.



Executive Capacity

Despite some planning improvements since the onset of crisis, Cyprus receives the SGI 2018’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.

While post-crisis reforms sought to make strategic planning a key element of administrative practices, political expediency has undermined implementation, and initially strong reform work has slowed. Line ministries draft bills, and the finance minister has decision-making power on budgetary proposals.

Discord between parties and political actors has led to considerable tension between the government and parliament. Most bills passed by the parliament’s in 2016 were later ruled unconstitutional by the courts, at the president’s request. Contradictions between previous and revised policies have clouded communication efforts.

A new RIA system has substantially improved policy-evaluation mechanisms. Government policy has begun responding more sensitively to public opinion. A process aimed at reorganizing municipalities and improving management is underway.

Executive Accountability

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, along with interest in politics more generally. The disengagement reflects plummeting trust in politicians and institutions, in part a result of the political establishment’s failure to respond to public concerns.

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. A past shift toward grassroots-level influence in parties has been reversed. The post-crisis labor-relations field is in flux, with actors’ influence uncertain. Civil-society groups have taken on a growing political role.
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