Cyprus

   

Executive Capacity

#41
Key Findings
With numerous gaps in central planning and strategic powers, Cyprus receives the SGI 2020’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.

Planning remains fragmented between ministries, but capacity levels have improved. As there is no central coordination body, planning is dominated by the Ministry of Finance’s budgetary considerations. In drafting laws, ministries are guided by government policies or general cabinet frameworks. Ministers have final decision-making powers within their area of authority.

A new RIA action plan seeks to rectify past deficiencies. The number of high-impact policies introduced without assessment remains a concern. Ex post assessment is not a part of government practice. Government communication relating to serious political issues has been contradictory or even confusing.

The government has largely restored economic growth and investment credibility, and has successfully consulted with parties and economic associations on key policies. A municipal reform effort entailing mergers and reorganizations is underway. Regulatory enforcement tends to be biased toward powerful groups and individuals.

Strategic Capacity

#38

How much influence do strategic planning units and bodies have on government decision-making?

10
 9

Strategic planning units and bodies take a long-term view of policy challenges and viable solutions, and they exercise strong influence on government decision-making.
 8
 7
 6


Strategic planning units and bodies take a long-term view of policy challenges and viable solutions. Their influence on government decision-making is systematic but limited in issue scope or depth of impact.
 5
 4
 3


Strategic planning units and bodies take a long-term view of policy challenges and viable solutions. Occasionally, they exert some influence on government decision-making.
 2
 1

In practice, there are no units and bodies taking a long-term view of policy challenges and viable solutions.
Strategic Planning
4
With reforms launched in 2014, the government began integrating strategic planning into administrative practices, a key omission over previous years. To this effect, the Directorate General for European Programs, Coordination and Development (DGEPCD) was assigned with competences such as planning, coordination, monitoring, and the evaluation of implementation. However, the Directorate’s work was limited to only part of the intended tasks. Decisive powers remained with the Ministry of Finance.

The law on fiscal responsibility adopted in 2014 aimed at enabling the government to identify goals and design policy actions based on strategic planning. Its implementation has been slow, as it needed to achieve the required capacity and planning skills as well as stronger political will. Planning remains fragmented between ministries, but capacity levels have improved and most central government services are involved. In the absence of a central coordination body, planning is dominated by the budgetary and fiscal considerations of the Ministry of Finance. Additionally, coherent strategic planning is sometimes compromised by ad hoc policies, such as the citizenship-by-investment scheme.

Citations:
1. Directorate of Strategy, Coordination, & Communication, Cyprus Ministry of Finance, http://mof.gov.cy/en/directorates-units/directorate-of-strategy-coordination-communication

Does the government regularly take into account advice from non-governmental experts during decision-making?

10
 9

In almost all cases, the government transparently consults with non-governmental experts in the early stages of government decision-making.
 8
 7
 6


For major political projects, the government transparently consults with non-governmental experts in the early stages of government decision-making.
 5
 4
 3


In some cases, the government transparently consults with non-governmental experts in the early stages of government decision-making.
 2
 1

The government does not consult with non-governmental experts, or existing consultations lack transparency entirely and/or are exclusively pro forma.
Expert Advice
3
After 2015, the government appointed scholars to the governing bodies of quasi-governmental institutions. Though the government created consultative bodies to advise it on economic issues, energy policy and geostrategic studies, results on their work are not publicly available.

Despite a long tradition of establishing advisory bodies, their tasks and scope of work has always been limited. The non-binding character of their proposals meant that decision-makers would pay little attention to them.

Institutions in which experts participate, such as the Fiscal Council, the Economic Council and the Scientific Council for research have seen their work and advice mostly ignored.

Generally, the state very rarely seeks advice from external academic experts or, more broadly, thinktanks. Nevertheless, the appointment of a chief scientist and a new scientific council for research in 2018 is a positive development.

Citations:
1. Chief scientist refuses to stay in his comfort zone, Cyprus Mail, 23 October 2019, https://cyprus-mail.com/2019/10/23/272558/

Interministerial Coordination

#41

Does the government office / prime minister’s office (GO / PMO) have the expertise to evaluate ministerial draft bills according to the government’s priorities?

10
 9

The GO / PMO provides regular, independent evaluations of draft bills for the cabinet / prime minister. These assessments are guided exclusively by the government’s priorities.
 8
 7
 6


The GO / PMO evaluates most draft bills according to the government’s priorities.
 5
 4
 3


The GO / PMO can rely on some sectoral policy expertise but does not evaluate draft bills.
 2
 1

The GO / PMO does not have any sectoral policy expertise. Its role is limited to collecting, registering and circulating documents submitted for cabinet meetings.
GO Expertise
2
Under the constitution, line ministers are fully responsible for their ministries. They draft bills and forward them to the Secretariat of the Council of Ministers. The Secretariat ensures that the attorney general’s office has checked bills for legal soundness and that they conform to established formats. The Secretariat also offers administrative support to the cabinet’s work, forwards decisions to relevant offices and monitors implementation. While according to the constitution, “the general direction and control of the government and the direction of general policy” lies with the Council of Ministers, the Council does not possess administrative depth and the necessary mechanisms to evaluate proposals and collectively chart policy.

Specific GO control that lies with the minister of finance and the cabinet, under the law on fiscal responsibility, is limited to mostly budgetary issues.

To what extent do line ministries involve the government office/prime minister’s office in the preparation of policy proposals?

10
 9

There are inter-related capacities for coordination between GO/PMO and line ministries.
 8
 7
 6


The GO/PMO is regularly briefed on new developments affecting the preparation of policy proposals.
 5
 4
 3


Consultation is rather formal and focuses on technical and drafting issues.
 2
 1

Consultation occurs only after proposals are fully drafted as laws.
Line Ministries
3
The services within the presidential palace have essentially been ad hoc and determined by the president in office. The tasks of the Secretariat of the Council of Ministers are mostly limited to providing administrative support and format checks of proposals. The Attorney General’s Office undertakes legality checks of draft legislation. In drafting laws, ministries may refer to policies formulated by the government or to general frameworks decided by the cabinet. Draft laws are discussed only during the presentation and deliberation process in the Council of Ministers and not within a broader policy discussion.

Under the law on fiscal responsibility, the finance minister controls policy proposals to ensure compliance with general budgetary plans and policies. No central coordinating body exists that could oversee policy proposals in a comprehensive manner.

Citations:
Directorate of Strategy, Coordination, & Communication, Cyprus Ministry of Finance, http://mof.gov.cy/en/directorates-units/directorate-of-strategy-coordination-communication

How effectively do ministerial or cabinet committees coordinate cabinet proposals?

10
 9

The vast majority of cabinet proposals are reviewed and coordinated first by committees.
 8
 7
 6


Most cabinet proposals are reviewed and coordinated by committees, in particular proposals of political or strategic importance.
 5
 4
 3


There is little review or coordination of cabinet proposals by committees.
 2
 1

There is no review or coordination of cabinet proposals by committees. Or: There is no ministerial or cabinet committee.
Cabinet Committees
5
Forming ad hoc and ministerial committees is a regular practice. The constitutional limit on the number of ministries (11) results in the overlapping of competences and a great need for coordination. There are at present 18 committees, which focus on sector-specific matters that are within the powers of many ministries. The formulation of policy frameworks is also within their purview. Departments or technical committees mainly from within the ministries support their work; in some cases, they may seek contributions from external experts. The scope of work and degree of efficiency in committee coordination are not easy to assess, given that no activity reports are published.

Citations:
1. Cabinet orders review of crisis management, Cyprus Mail, 31 July 2018, https://cyprus-mail.com/2018/07/31/cabinet-orders-review-of-crisis-management/

How effectively do ministry officials/civil servants coordinate policy proposals?

10
 9

Most policy proposals are effectively coordinated by ministry officials/civil servants.
 8
 7
 6


Many policy proposals are effectively coordinated by ministry officials/civil servants.
 5
 4
 3


There is some coordination of policy proposals by ministry officials/civil servants.
 2
 1

There is no or hardly any coordination of policy proposals by ministry officials/civil servants.
Ministerial Bureaucracy
5
The broad area that each of the 11 ministries is responsible for has been extended to new fields since EU membership. Ministry officials and civil servants participate in ad hoc bodies or seek coordination with other ministries and formulate policy proposals. Final decisions rest with the ministers themselves, who sometimes apply political criteria. While the constitution accords exclusive powers to ministers within their ministry, bureaucrats have an increasingly significant role in formulating policies and proposals.

More interministerial interaction was promoted through units created in the framework of the reform effort. However, the dissolution of the Unit for Administrative Reform has led to the reallocation of its tasks back to the ministries. The absence of a centralized coordination body has increased the need for consultation and coordination between line ministries.

Citations:
The Unit for Administrative Reform to be Dissolved, InBusiness, 27 July 2018, https://inbusinessnews.reporter.com.cy/financials/cyprus/article/191286/dialyetai-i-monada-dioikitikis-metarrythmisis [in Greek]

How effectively do informal coordination mechanisms complement formal mechanisms of interministerial coordination?

10
 9

Informal coordination mechanisms generally support formal mechanisms of interministerial coordination.
 8
 7
 6


In most cases, informal coordination mechanisms support formal mechanisms of interministerial coordination.
 5
 4
 3


In some cases, informal coordination mechanisms support formal mechanisms of interministerial coordination.
 2
 1

Informal coordination mechanisms tend to undermine rather than complement formal mechanisms of interministerial coordination.
Informal Coordination
4
A practice of informal meetings exists but has been infrequently utilized. During the post-2010 economic difficulties, more formal meetings took place than before. In the period under review, we noted an increased number of ad hoc formal meetings, in particular with political parties, for important issues, such as migration, refugees and general reforms.

How extensively and effectively are digital technologies used to support interministerial coordination (in policy development and monitoring)?

10
 9

The government uses digital technologies extensively and effectively to support interministerial coordination.
 8
 7
 6


The government uses digital technologies in most cases and somewhat effectively to support interministerial coordination.
 5
 4
 3


The government uses digital technologies to a lesser degree and with limited effects to support interministerial coordination.
 2
 1

The government makes no substantial use of digital technologies to support interministerial coordination.
Digitalization for Interministerial C.
4
The use of digital technology covers a small spectrum of government work and activities as well as relations and interactions with citizens on public services. Some common IT programs aim at assisting the coordination of a limited number of activities, relating to payments, budget preparation and monitoring the progress of projects.

The Exandas project launched in September 2019 facilitates monitoring development works. An enterprise resource planning system, which is being prepared, is expected to enable the full coordination of government planning. Compared to other EU member states, digital services in public services are limited.

Citations:
1. The contract for Enterprise Resource Planning System for the Public Sector was signed, PIO, 7 November 2018, https://www.pio.gov.cy/en/press-releases-article.html?id=4631#flat
2. European Commission, The Digital Economy and Society Index, https://ec.europa.eu/digital-single-market/en/desi

Evidence-based Instruments

#28

To what extent does the government assess the potential impacts of existing and prepared legal acts (regulatory impact assessments, RIA)?

10
 9

RIA are applied to all new regulations and to existing regulations which are characterized by complex impact paths. RIA methodology is guided by common minimum standards.
 8
 7
 6


RIA are applied systematically to most new regulations. RIA methodology is guided by common minimum standards.
 5
 4
 3


RIA are applied in some cases. There is no common RIA methodology guaranteeing common minimum standards.
 2
 1

RIA are not applied or do not exist.
RIA Application
6
A RIA scheme was introduced in 2007 as part of a project on better regulation. A robust RIA tool was adopted in 2016 and training programs enabled its use in 2017.

Following the dissolution of a centralized Unit for Administrative Reform, the Department of Public Administration and Personnel assumed the RIA tasks. The department drafted a new action plan for better regulation for the period 2019 – 2022, which was adopted in early November 2019. The action plan seeks to address deficiencies in the system and improve implementation by instilling the necessary public service culture as well as establishing appropriate work processes and procedures.

Policies introduced without RIA via the discretionary powers of the Council of Ministers remains a serious concern and is under review. The “investment program,” the arbitrary granting of permits for the construction of tall buildings, and the sale of Cypriot citizenship continue to impact a wide spectrum of rules and practices, partly neutralizing RIA implementation and efforts for better regulation. Despite reforms, the impacts of Cyprus’s sale of permanent residency and citizenship has not been sufficiently appreciated by government.

Citations:
1. Better Regulation Progress Report, May 2018 [in Greek], https://drive.google.com/file/d/1stXSvKF6tU2AeSXbBEbNGqfbdGLAjGfa/view?usp=sharing
2. Transparency International, European Getaway, https://www.transparency.org/whatwedo/publication/golden_visas

Does the RIA process ensure participation, transparency and quality evaluation?

10
 9

RIA analyses consistently involve stakeholders by means of consultation or collaboration, results are transparently communicated to the public and assessments are effectively evaluated by an independent body on a regular basis.
 8
 7
 6


The RIA process displays deficiencies with regard to one of the three objectives.
 5
 4
 3


The RIA process displays deficiencies with regard to two of the three objectives.
 2
 1

RIA analyses do not exist or the RIA process fails to achieve any of the three objectives of process quality.
Quality of RIA Process
5
The OECD’s 2019 RIA report points to reduced human resources that affect implementation and monitoring. Some gaps in implementation and monitoring occurred in 2018 during the period when responsibilities were transferred from the dissolved Unit for Administrative Reform to the Department of Public Administration and Personnel. The report highlights the successful introduction of SME impact assessments of new legislation and the growing number of training workshops.

Thus far, the impact of better regulation efforts remains clear. At present, stakeholder participation is more effectively implemented when SMEs are concerned. Improvements in RIA assessment procedures, participation and forms of evaluation are in the process of being institutionalized through processes and working groups.

Does the government conduct effective sustainability checks within the framework of RIA?

10
 9

Sustainability checks are an integral part of every RIA; they draw on an exhaustive set of indicators (including social, economic, and environmental aspects of sustainability) and track impacts from the short- to long-term.
 8
 7
 6


Sustainability checks lack one of the three criteria.
 5
 4
 3


Sustainability checks lack two of the three criteria.
 2
 1

Sustainability checks do not exist or lack all three criteria.
Sustainability Check
4
The assessment questionnaires inquire on positive and negative impacts of a policy proposal across various aspects of the economy, society, and environment as well as on the processes and work of the government. They also include questions on methods and processes followed, such as interactions with other ministries’ services and consultations with the public and other stakeholders.

There are three questionnaires: for new legislation or amendments, for legislation transposing EU directives into national law and for legislation ratifying international treaties.

Questions on sustainability remain exclusively economic, focusing on budgetary impacts and macroeconomic effects. A new dimension will be introduced: an assessment of the possible impacts on human rights.

To what extent do government ministries regularly evaluate the effectiveness and/or efficiency of public policies and use results of evaluations for the revision of existing policies or development of new policies?

10
 9

Ex post evaluations are carried out for all significant policies and are generally used for the revision of existing policies or the development of new policies.
 8
 7
 6


Ex post evaluations are carried out for most significant policies and are used for the revision of existing policies or the development of new policies.
 5
 4
 3


Ex post evaluations are rarely carried out for significant policies and are rarely used for the revision of existing policies or the development of new policies.
 2
 1

Ex post evaluations are generally not carried out and do not play any relevant role for the revision of existing policies or the development of new policies.
Quality of Ex Post Evaluation
2
Given the deficiencies in strategic planning, ex post evaluation has not been part of government practice. However, in the framework of commitments to reform the public administration, the government in recent years solicited the drafting of studies by the World Bank and others. These studies on the administration and line ministries aimed mainly at restructuring and reforming the administration and its procedures, while also reviewing their general policies. Specific policies in ministries are not evaluated and progress achieved so far remains limited.

The administration acknowledges that sectoral reviews should form part of strategic planning.

Citations:
Public Administration Reform – Restructuring ministries and administration http://www.reform.gov.cy/en/public-administration-reform/restructuring-in-the-public-sector

Societal Consultation

#29

Does the government consult with societal actors in a fair and pluralistic manner?

10
 9

The government always consults with societal actors in a fair and pluralistic manner.
 8
 7
 6


The government in most cases consults with societal actors in a fair and pluralistic manner.
 5
 4
 3


The government does consult with societal actors, but mostly in an unfair and clientelistic manner.
 2
 1

The government rarely consults with any societal actors.
Public Consultation
5
Consultation with societal actors has been a general practice for decades, though generally not at the stage of policy formulation. Once a policy is decided or a draft bill is before a parliamentary committee, stakeholders are invited to voice their views. Generally, vociferous stakeholders are more successful with realizing their demands than less powerful groups and may engage in consultations before final policy decisions are made. Trade unions and employers associations take part in the so-called tripartite system, giving them preferential access to public authorities. Consultation practices were sidelined during the implementation of the Memorandum of Understanding (MoU). After exiting the MoU in early 2016, the government appeared more willing to accommodate previously rejected union demands. Also, under trade union pressure, projects on privatizing the telecoms and electricity utilities have remained pending. Government deliberations in 2019 on increasing the corporate tax were immediately withdrawn after reactions from employers unions.

Public consultation before rulemaking is regularly practiced by some departments and less systematically than expected. The results and impact of such consultations are not always transparent or published.

In the framework of RIA assessment, representatives of SMEs are systematically consulted, participating in the process as stakeholders.

In order to ensure approval of its policies by the parliament, the government consults with political parties, in particular when a major crisis is imminent. In 2019, the government initiated consultations and ultimately secured support from the political parties for long-due administration reforms and for new migration policies.

Citations:
1. Tax hike proposal looks to the future, but not thought out well, Cyprus Mail, 9 August 2019, https://cyprus-mail.com/2019/08/09/our-view-tax-hike-proposal-looks-to-the-future-but-not-thought-out-well/
2. So-called dialogue and consensus always favors unions, Cyprus Mail opinion, 29 September 2018, https://cyprus-mail.com/2018/09/29/our-view-so-called-dialogue-and-consensus-always-favours-the-unions/

Policy Communication

#38

To what extent does the government achieve coherent communication?

10
 9

Ministries are highly successful in aligning their communication with government strategy.
 8
 7
 6


Ministries most of the time are highly successful in aligning their communication with government strategy.
 5
 4
 3


Ministries occasionally issue public statements that contradict the public communication of other ministries or the government strategy.
 2
 1

Strategic communication planning does not exist; individual ministry statements regularly contradict each other. Messages are often not factually consistent with the government’s strategy.
Coherent Communication
3
Government communications through official channels were complemented by increasingly intense interactions between government officials and the media. With ministers and other officials acting more independently in their communications, the long-standing goal of achieving coherent communication could not be met.

In 2019, the president and his government faced some highly critical challenges, including the case of seven missing women, victims of a serial killer, corruption and the selling of passports. However, their communication performance has again been poor. There was a failure to communicate policies in a clear and coherent manner. In addition, responses to criticism from domestic political forces and the EU on political and ethical issues were often contradictory. The active resorting to conspiracy theories and blame games as well as attempting to discredit critics did not help the government. Thus, informing the public and dispelling confusion saw little success.

Citations:
1. Don’t expect a deep investigation into dodgy passport recipients, Cyprus Mail, 25 October 2019, https://cyprus-mail.com/2019/10/25/our-view-dont-expect-a-deep-investigation-into-dodgy-passport-recipients/

Implementation

#41

To what extent can the government achieve its own policy objectives?

10
 9

The government can largely implement its own policy objectives.
 8
 7
 6


The government is partly successful in implementing its policy objectives or can implement some of its policy objectives.
 5
 4
 3


The government partly fails to implement its objectives or fails to implement several policy objectives.
 2
 1

The government largely fails to implement its policy objectives.
Government Effectiveness
4
The European Commission and the IMF praised the government in 2019 for sustained growth rates and tangible economic successes. General unemployment decreased from 8.2% in August 2018 to 6.8% in August 2019. However, youth unemployment remained high (16.6% in June 2019). The Commission also warned that the tourism and the construction sectors cannot be expected to guarantee long-term economic sustainability. While noting improvements in employment and the reduction of non-performing loans (NPLs), the Commission recommended major improvements to state employment services and called for efficiently addressing the NPLs problems. While Cyprus achieved a credit rating of BBB – credit rating agencies remain cautious in their assessment. The increase of public debt from the management of NPLs in 2018 has receded, with the debt falling below 100%. Despite good economy indicators, the EU and others warn that achieving sustainability will require the government to address critical issues, such as shifting economic activity to new sectors, accelerating structural and other reforms of the central and local governments, reforming the judicial system, and privatizing state-owned enterprises (SOEs). The funding of a fully implemented national health system and the eventual impact of court decisions on the salaries and benefits of public employees remain issues of serious concern.

Overall, while policies improved economic confidence, competitiveness has shown little progress. The government is still expected to meet major challenges.

Citations:
1. EU Commission Country Specific Recommendations, Cyprus, June 2019, https://ec.europa.eu/info/sites/info/files/file_import/2019-european-semester-country-specific-recommendation-commission-recommendation-cyprus_en.pdf
2. Rating agencies cautious over Cyprus’ economy, In-Cyprus, 20 May 2019, https://in-cyprus.com/rating-agencies-cautious-over-cyprus-economy/

To what extent does the organization of government provide mechanisms to ensure that ministers implement the government’s program?

10
 9

The organization of government successfully provides strong mechanisms for ministers to implement the government’s program.
 8
 7
 6


The organization of government provides some mechanisms for ministers to implement the government’s program.
 5
 4
 3


The organization of government provides weak mechanisms for ministers to implement the government’s program.
 2
 1

The organization of government does not provide any mechanisms for ministers to implement the government’s program.
Ministerial Compliance
4
Under the Cypriot presidential system, the appointment and dismissal of a minister are the president’s prerogative. Implementation of line ministry policies rests entirely with each minister. In September 2019, the government launched the website Exandas to monitor the progress of works and policies; a task also carried out by the Secretariat of the Council of Ministers. However, no dedicated personnel or processes exist for the overall assessment of ministries’ policies and compliance with state policies.
Monitoring is also difficult within line ministries, due to the very broad scope of each ministry’s competences and departmentalization. This makes planning and coordination difficult to achieve. Strategic planning that benefits implementation and provides evaluation benchmarks is still not effectively implemented.

How effectively does the government office/prime minister’s office monitor line ministry activities with regard to implementation?

10
 9

The GO / PMO effectively monitors the implementation activities of all line ministries.
 8
 7
 6


The GO / PMO monitors the implementation activities of most line ministries.
 5
 4
 3


The GO / PMO monitors the implementation activities of some line ministries.
 2
 1

The GO / PMO does not monitor the implementation activities of line ministries.
Monitoring Ministries
4
The constitution establishes that the direction and control of the government and general policy lie with the Council of Ministers. This creates a circular relationship since each minister is the sole authority in her/his ministry. The Directorate General for European Programs, Coordination and Development (DGEPCD) has some monitoring functions, but these are limited to growth policies. The Secretariat of the Council of Ministers monitors the implementation of the cabinet’s decisions, while the website-based tool Exandas, launched in September 2019, may help ministers and citizens monitor the progress of works and policies. This appears static at present. The question of whether any governmental actor has the capacity or processes to effectively exercise direction and control remains open. Finally, the law on fiscal responsibility assigns the finance minister central oversight and coordinating powers on budgetary and fiscal issues.

Citations:
President launches “Exandas” portal, Stockwatch, 6 September 2019, https://www.stockwatch.com.cy/en/article/genika/president-launches-exandas-portal

How effectively do federal and subnational ministries monitor the activities of bureaucracies/executive agencies with regard to implementation?

10
 9

The ministries effectively monitor the implementation activities of all bureaucracies/executive agencies.
 8
 7
 6


The ministries monitor the implementation activities of most bureaucracies/executive agencies.
 5
 4
 3


The ministries monitor the implementation activities of some bureaucracies/executive agencies.
 2
 1

The ministries do not monitor the implementation activities of bureaucracies/executive agencies.
Monitoring Agencies|Bureaucracies
3
The Council of Ministers appoints the governing bodies of quasi-governmental institutions and approves their budgets. The law on fiscal responsibility offers some budget control, while 2014 amendments to the law on the governing bodies of these institutions strengthens government control. However, these changes appear to neither offer remedies against favoritism nor to improve oversight and sound management.

As Cyprus does not have a federal state structure, local authorities must be taken into account. Here the situation is not better. The auditor general notes in his 2016 report (the latest available) high debt, disrespect for rules and procedures, and functional inadequacies in many municipalities.

Radical reforms of public law bodies and local authorities, on both the structural and functional levels, has long been on the agenda. Such reforms have been suggested by the EU, IMF and specially commissioned studies. They have also sought improvements in the capacity for financial management and the monitoring of risk.

Citations:
1. Cyprus should pursue delayed reforms, IMF says, 5 June 2019, https://www.cyprusprofile.com/en/articles/cyprus-should-pursue-delayed-reforms-imf-says/

To what extent does the central government ensure that tasks delegated to subnational self-governments are adequately funded?

10
 9

The central government enables subnational self-governments to fulfill all their delegated tasks by funding these tasks sufficiently and/or by providing adequate revenue-raising powers.
 8
 7
 6


The central government enables subnational governments to fulfill most of their delegated tasks by funding these tasks sufficiently and/or by providing adequate revenue-raising powers.
 5
 4
 3


The central government sometimes and deliberately shifts unfunded mandates to subnational governments.
 2
 1

The central government often and deliberately shifts unfunded mandates to subnational self-governments.
Task Funding
4
Local government bodies receive substantial state subsidies, amounting in some cases up to 40% of their budget. In addition, the Council of Ministers, in particular the ministers of interior and finance, have extensive powers to manage the finances and assets of municipalities. Efforts to reform municipalities were renewed in 2019 after long debates and disagreements that began in 2014. Existing plans for mergers and reorganizations aim to address the main challenges facing local governments by making them more efficient (including financially), improving management, fighting corruption and upgrading service quality.

Citations:
1. Petrides: We want to create a new kind of local authority, Cyprus Mail, 25 September 2019, https://cyprus-mail.com/2019/09/25/petrides-we-want-to-create-a-new-kind-of-local-authority/

To what extent does central government ensure that subnational self-governments may use their constitutional scope of discretion with regard to implementation?

10
 9

The central government enables subnational self-governments to make full use of their constitutional scope of discretion with regard to implementation.
 8
 7
 6


Central government policies inadvertently limit the subnational self-governments’ scope of discretion with regard to implementation.
 5
 4
 3


The central government formally respects the constitutional autonomy of subnational self-governments, but de facto narrows their scope of discretion with regard to implementation.
 2
 1

The central government deliberately precludes subnational self-governments from making use of their constitutionally provided implementation autonomy.
Constitutional Discretion
4
The constitutional status of local government is vague. Placed originally under the authority of the Communal Chambers (Art. 86-111), which were abolished in 1964, local authorities are governed by the Law on Municipalities of 1985. Local authorities possess limited competences because constitutional clauses allow the central government to impose restrictions on their powers. Budgets and management decisions on a variety of financial issues and assets are subject to approval by the Council of Ministers. Additionally, the law on fiscal responsibility (20(I)/2014) imposes strict budget controls by the finance minister. Reforms under discussion include the merger of the excessive number of municipalities, a reform that would require local approval via referenda.
In order to avoid a vote in which local interests would likely prevail over broader goals, the government seeks consensus. Though this points to centralization tendencies, the reform aims at addressing a situation where local authorities have so far not made good use of their autonomy..

Citations:
1. Petrides: We want to create a new kind of local authority, Cyprus Mail, 25 September 2019, https://cyprus-mail.com/2019/09/25/petrides-we-want-to-create-a-new-kind-of-local-authority/

To what extent does central government ensure that subnational self-governments realize national standards of public services?

10
 9

Central government effectively ensures that subnational self-governments realize national standards of public services.
 8
 7
 6


Central government largely ensures that subnational self-governments realize national standards of public services.
 5
 4
 3


Central government ensures that subnational self-governments realize national minimum standards of public services.
 2
 1

Central government does not ensure that subnational self-governments realize national standards of public services.
National Standards
2
Standards and indicators at the central government level often lack consistency and universality. The government’s decision to revive reform efforts to create a complete framework and improve implementation is a positive sign. In the meantime, the Ministry of Finance continues to issue guidelines to subnational entities and public institutions on budget design, based on strategic planning. These guidelines set general standards and procedures, in particular on fiscal issues. No recent evaluation reports are available regarding application issues.

In the latest available report on local government, the auditor general pointed to disregard for standards and procedures. He stressed that “the situation in municipalities is not viable” and urged the government to make the approval of pending reforms an extremely high priority.

In addition to guidelines, the Ministry of Finance annually publishes evaluation reports on the fiscal risks facing each sector. These reports also include proposals for addressing problems and minimizing risks.
Local authorities, for example, are offered guidance, among others, on how to avoid risks related to non-guaranteed loans, financial claims before the courts and excessive expenses.

Citations:
1. Report on Fiscal Risks, MOF Cyprus, September 2018, http://mof.gov.cy/assets/modules/wnp/articles/201705/301/docs/ekthesi_dimosionomik_kindinwn_19.pdf

To what extent is government enforcing regulations in an effective and unbiased way, also against vested interests?

10
 9

Government agencies enforce regulations effectively and without bias.
 8
 7
 6


Government agencies, for the most part, enforce regulations effectively and without bias.
 5
 4
 3


Government agencies enforce regulations, but ineffectively and with bias.
 2
 1

Government agencies enforce regulations ineffectively, inconsistently and with bias.
Regulatory Enforcement
3
General government policies and practices appear fair. However, a bias toward serving the interests of powerful economic groups and individuals as well as bowing to the demands of strong trade unions becomes evident when the stakes are high. Also, both the government and political parties often act on the basis of political expediency: to avoid confrontation with strong formal or informal interest groups, they resort to procrastination, adopt rules that are either ineffective, or simply avoid decision-making. The public good is, thus, not fairly served and lingering governance challenges persist.

A glaring example is the citizenship granting investment scheme. In addition to raising potential ethical issues, corruption and money laundering, it neutralizes laws on town planning. Instead, it favors land developers, upsets the housing market and risks environmental damage. Land development – including for new golf courses – has been allowed within Natura 2000 protected sites, ignoring existing water scarcity challenges. In the financial sector, some argue the ESTIA scheme on foreclosures and non-performing loans was further amended by the parliament in ways “serving the strategic defaulters.”

The general lack of substantial progress on reforms is indicative of a policy bias among the government and parties of avoiding any possible political costs.

Citations:
1. Developers defend passport scheme, Cyprus Mail, 2 October 2019, https://cyprus-mail.com/2019/10/26/developers-defend-passport-scheme/
2. Most hotels didn’t have operating licences renewed in 2018, Cyprus Mail, 4 October 2019, https://cyprus-mail.com/2019/10/04/most-hotels-didnt-have-operating-licences-renewed-in-2018/
3. Estia scheme rewards strategic defaulters, Cyprus Mail, 3 September 2019,
https://cyprus-mail.com/2019/09/03/our-view-estia-scheme-rewards-strategic-defaulters/

Adaptability

#37

To what extent does the government respond to international and supranational developments by adapting domestic government structures?

10
 9

The government has appropriately and effectively adapted domestic government structures to international and supranational developments.
 8
 7
 6


In many cases, the government has adapted domestic government structures to international and supranational developments.
 5
 4
 3


In some cases, the government has adapted domestic government structures to international and supranational developments.
 2
 1

The government has not adapted domestic government structures, no matter how beneficial adaptation might be.
Domestic Adaptability
5
Numerous studies aiming to reform the administration have been conducted in the last decade. Their general goal was to offer prescriptions for overcoming the difficulties caused by the rigid structures of the 1960 constitution as well as fight the dominating lack of innovative spirit. Notwithstanding, there has thus far been little progress, despite the EU and IMF repeatedly urging reforms.

Some changes were brought about by EU accession: the creation of new institutions and adoption of new practices. However, as a single region under the EU’s “cohesion policy,” Cyprus has not been significantly affected by relevant EU policies.

The 2013 Memorandum of Understanding with creditors aimed at more radical reforms, including tackling governmental structures and entrenched mentalities. Growing strategic-planning capacity and promoting administrative reforms will require additional critical targets for success, such as changing administrative practices and culture, and promoting meritocracy.

In fall 2019, the government appeared willing to renew reform efforts. Meetings with the leadership of the parties aimed to promote some reform proposals previously rejected by the parliament. The renewed effort for reforms may be negatively affected by the absence of a centralized coordinating body following the dissolution in 2018 of the Unit for Administrative Reform.

Citations:
1. Studies for the reform of the public administration, ministries and departments http://www.reform.gov.cy/en/public-administration-reform

To what extent is the government able to collaborate effectively with international efforts to foster global public goods?

10
 9

The government can take a leading role in shaping and implementing collective efforts to provide global public goods. It is able to ensure coherence in national policies affecting progress.
 8
 7
 6


The government is largely able to shape and implement collective efforts to provide global public goods. Existing processes enabling the government to ensure coherence in national policies affecting progress are, for the most part, effective.
 5
 4
 3


The government is partially able to shape and implement collective efforts to provide global public goods. Processes designed to ensure coherence in national policies affecting progress show deficiencies.
 2
 1

The government does not have sufficient institutional capacities to shape and implement collective efforts to provide global public goods. It does not have effective processes to ensure coherence in national policies affecting progress.
International Coordination
4
The proclaimed role of Cyprus as a bridge between three continents draws on its geographical location. However, a focus and preoccupation with domestic challenges has prevented the country from seizing opportunities offered through its membership in the EU, UN and other intergovernmental organizations. A clear strategy for international coordination appears to be missing, and contributions to global and regional politics and public welfare has been limited. Government activities are in recent years focusing on bi- and tri-lateral relations as well as initiatives aiming to coordinate the exploiting of hydrocarbons in the Eastern Mediterranean with neighboring countries. 2019 showed that, given existing conflicts in the region (which are partly fueled by hydrocarbon explorations), forged alliances do not seem to help secure a better environment for the region. Also, the Cyprus conflict decisively absorbs authorities’ activities.

Citations:
1. EEZ: Cyprus has the right, Turkey has the might, Cyprus Mail, 06 October 2019, https://cyprus-mail.com/2019/10/06/eez-cyprus-has-the-right-turkey-has-the-might/

Organizational Reform

#32

To what extent do actors within the government monitor whether institutional arrangements of governing are appropriate?

10
 9

The institutional arrangements of governing are monitored regularly and effectively.
 8
 7
 6


The institutional arrangements of governing are monitored regularly.
 5
 4
 3


The institutional arrangements of governing are selectively and sporadically monitored.
 2
 1

There is no monitoring.
Self-monitoring
4
The main structures and institutions of 1960 remain largely unchanged. Slow reform efforts usually commence when dysfunctions reach critical levels. This reform paralysis is connected to the absence of institutional monitoring. Efforts undertaken by a centralized unit for reform produced some results, mostly in the improvement of procedures. The parliament’s rejection of the establishment of a sub-ministry for development led to the reassignment of tasks from the centralized unit for reform back to three line ministries. This makes reforms harder, given that self-monitoring in line ministries is weak or absent as no central coordination and monitoring body exists.

In the absence of internal monitoring, the government commissioned studies to identify existing deficiencies. These have not, however, led to the creation of monitoring mechanisms and no plans in this direction have been made public.

To what extent does the government improve its strategic capacity by changing the institutional arrangements of governing?

10
 9

The government improves its strategic capacity considerably by changing its institutional arrangements.
 8
 7
 6


The government improves its strategic capacity by changing its institutional arrangements.
 5
 4
 3


The government does not improve its strategic capacity by changing its institutional arrangements.
 2
 1

The government loses strategic capacity by changing its institutional arrangements.
Institutional Reform
5
Efforts to improve the efficiency of the administration have been stalled for years. However, in fall 2019 the government expressed its will to proceed with reform plans. The main goals are to improve the selection and promotion of personnel, speed up procedures, create control mechanisms, and clear confusion on roles and competences.

A major challenge is expanding strategic-planning capacities, which is currently performed without any central monitoring and evaluation mechanisms. The required professional training of personnel is advancing, albeit slowly and without publicly available reporting.
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