Cyprus overview

Cityscape

In Cyprus we focus on:

  • Strengthening the financial sector to build up resilience and improve governance
  • Supporting the authorities’ privatisation programme
  • Assisting corporate restructuring and providing finance to small and medium-sized enterprises
Founding EBRD member Cyprus received recipient country status in May 2014 following a decision by the Bank’s shareholders at the EBRD’s Annual Meeting in Warsaw.
 
The change in status was requested in February 2014 in a letter which sought EBRD support only for “as long as is strictly necessary to help Cyprus address its transition challenges”.
 
The Warsaw decision assumes that the EBRD will not engage in new operations in Cyprus after the end of 2020.
 
A country strategy was adopted on 6 May 2015. The document identifies the priorities for the EBRD’s engagement in Cyprus.
 
The EBRD will aim to carry out projects across the whole of the island for the benefit of either community.
 
The Cyprus economy has recovered from a deep recession which followed the boom period between 2004, when Cyprus joined the EU, and 2008, when it adopted the euro.
 
However, despite making important progress towards European integration, significant transition challenges and a number of key structural issues have not been addressed and non-performing loans represent a significant issue.
 
In particular, privatisation and modernisation of public utilities and infrastructure have largely stalled. Standards of governance and supervision in the banking sector need significant improvement.
 

The EBRD’s latest Cyprus strategy was adopted on 6 May 2015

EBRD forecast for Cyprus's real GDP growth in 2018 3.9%
EBRD forecast for Cyprus's real GDP growth in 2019 3.5%

A major economic recovery in Cyprus is continuing. After GDP growth in 2017 of 4.2 per cent, the positive trend has continued into 2018 with growth in the first half of 2018 estimated at 3.9 per cent year-on-year, mainly driven by private consumption and net exports. After double-digit rises in the previous two years, tourist arrivals in the first eight months of 2018 increased by 8 per cent, as Cyprus is continuing to benefit from instability elsewhere. Meanwhile, unemployment has dropped to single-digit levels, reaching 7.3 per cent in June 2018. After a few years of declining prices, inflation returned to the economy, averaging 0.7 per cent in 2017 (HICP) and 0.4 per cent in the first eight months of 2018. 

Cyprus in the EBRD’s 2018-19 Transition Report