Cyprus gets first RRF tranche of €85 mln

Cyprus received its first tranche of 85 million euros from the European Union’s Recovery and Resilience Facility (RRF) on Friday, but more needs to be done for the following tranches, Nicosia was told.

A delegation of the European Commission’s Directorate General for Economic and Financial Affairs (DG ECFIN) met on Thursday with the Parliamentary Finance Committee and stressed the need for the timely implementation of the legislation related to the RRF.

The problems of nonperforming loans (NPLs) and high energy prices dominated the discussion, with the Commission’s technocrats pointing out the need for further progress in relation to NPLs and meeting the RRF’s milestones, while MPs noted the special conditions in Cyprus after the 2013 financial crisis and the need for more to be done to protect vulnerable groups.

The director of the Recovery and Resilience Task Force at the European Commission, Maria Teresa Fabregas, said that it is very important that the member-states comply with the legal elements of the plan and emphasized the great role of parliaments in the adoption of the relevant agreements. She noted the important reforms passed by the Cypriot Parliament in the fields of justice, energy and dealing with NPLs, while mentioning that there are other laws that must be adopted, regarding inter alia labor market, education and tax planning.

The director for the economies of the member-states at DG ECFIN, Luc Tholoniat, said that it was confirmed that Cyprus would be subject to an in-depth review of macroeconomic balances. He also mentioned the Commission’s recommendation, which repeated that the suspensions of foreclosures in Cyprus create problems in terms of achieving the goal of further reduction of NPLs.

Regarding the “Mortgage to Rent” scheme the government has proposed to protect vulnerable borrowers who cannot restructure their loans secured against their primary residence, he said that they were reviewing it in collaboration with the DG for Competition.

He further noted that the disbursement of the €85 million is just the beginning of a long journey. At the same time, he said that the Commission is examining Cyprus’ second payment request.

He added there should be some revision of Cyprus’ plan, as the unexpectedly good economic performance of the country means Cyprus will lose some €90 million from the original plan.