National Recovery and Resilience plan to increase Cyprus’ GDP by 7 percentage points

Cyprus’ National recovery and resilience plan aims to strengthen the resilience of Cyprus’ economy and the country`s potential for economic, social and environmentally sustainable long-term growth and prosperity, said Director General of the Ministry of Finance, George Pantelis. He added that compared to the baseline scenario, the country`s GDP will be increased by 7 percentage points more during the five years of implementation of the plan.

Speaking at the online discussion on "Europe Recovery Plan, an Economy at the Service of the People", organized by Oxygono and Europe Direct Larnaca, Pantelis stressed that the reforms and investments that will be made through the Plan are estimated to increase productivity in the medium term, while in relation to GDP it is estimated that from 10.6% today the productivity contribution will increase to 23.5%, while employment will increase from 13.2%, at 29.3%.

The General Director of the Ministry of Finance said that it’s expected that the formal adoption of the Cyprus plan by the European Commission, will mobilize public resources of € 1.23 billion, of which € 230 million concerns the financing through the issuance of loans, while the first disbursement will be made within the third quarter of the year.

"The Cypriot authorities, especially the Ministry of Finance, responding to the call of the European Commission, have prepared the national Recovery and Resilience plan that aims to mitigate the economic and social impact of the pandemic but also to make European economies and societies more sustainable and resilient." Pantelis stressed, adding that most of the expenditures will be made in the period 2022 - 2025 with 2024 and 2025 being the years with the highest expenditures.

He noted that the project will be monitored by the EU and there will be six months progress reports that will be evaluated on the basis of milestones and targets.

Pantelis pointed out that the main pillars of the plan are the transition to the green economy and the digital transformation, while he said that the Plan is not only based on the mobilization of public funds but also on the additional mobilization of private funds.

In his speech, the Senior Financial Adviser of the European Commission Delegation to Cyprus and Member of the European Commission Special Task Force on recovery and resilience, Christos Paschalides said that the EU Recovery and Resilience Mechanism is the EU`s response to one of the strongest and most special crises it has faced in its history. He pointed out that it is a fund that introduces mechanisms aiming to help Member States emerge from the health crisis stronger and more resilient, preparing them for the new era.

Referring to Next Generation EU, Paschalides said that according to assessments, the effective implementation of Next Generation EU could increase Europe’s GDP by two percentage points per year, and create 2 million jobs.

"The economic impact of the plan for Cyprus is expected to be very substantial, both in terms of economic activity and employment," he also stressed.

He also stressed that every available amount of the plan has a multiplier effect on the economy and prosperity, which is strengthened by the fact that the effort is pan-European and comprehensive, aiming to long term results.