The Audit Office notes that the selection of investment projects included in Cyprus’ original Recovery and Resilience Plan (RRP) was not based on a comprehensive prioritisation of all potentially eligible projects, taking into account their economic and social impact as well as their actual level of maturity.
In a special report on the ‘Absorption of RRF Funds’, the Audit Office states that measures included in Cyprus’ RRP were chosen according to the criteria set out in the European Commission’s regulatory framework. However, it stresses that Cyprus did not prioritise projects in a way that would ensure maximum effectiveness and efficiency of available resources.
“Proper prioritisation is important because it ensures not only that resources are directed to sustainable actions aligned with the Commission’s priorities, but also that they deliver the greatest benefit to citizens,” the report says.
As an example, it cites the Greece-Cyprus electricity interconnection project, whose implementation risk was initially assessed as low.
Excessive number of measures
The Audit Office also points out that the number of measures included, as well as the associated milestones and targets, was disproportionately high relative to Cyprus’ size and the level of funding allocated. This made monitoring more difficult, hindered timely implementation and created a risk of losing funding.
Lack of national public‑consultation framework
The report notes that preparation of the RRP did not rely on an established and comprehensive national public‑consultation framework, as the relevant Cabinet decision was adopted on 4 January 2024 – after the plan had already been designed.
Although targeted technical discussions were held with relevant bodies, the limited involvement of broader stakeholders may have reduced the degree to which societal and market needs were incorporated, ultimately limiting the plan’s socioeconomic impact.
Why implementation was delayed
The audit reviewed developments up to the fourth amendment of the plan, approved by the Council on 20 June 2025. The delays were found to stem mainly from:
- immaturity of several projects,
- unrealistic initial timelines,
- problems with public procurement processes and appeals before the Tenders Review Authority,
- increased delivery times and higher costs, mainly due to the war in Ukraine,
- limited interest or withdrawal by potential beneficiaries of grant schemes,
- delays in securing necessary permits and certificates, and in producing required studies and designs,
- financial constraints,
- political issues, particularly regarding reforms.
56% absorption rate – €50 million at risk
About one year before the RRF's final deadline, Cyprus had absorbed only 56% of its allocated €1.02 billion. As of 8 August 2025, the non‑repayable support disbursed amounted to €567.7 million, including €151.67 million in pre‑financing.
According to data retrieved from the EU’s RRF scoreboard on 16 January 2026 (covering up to December 2025), Cyprus ranks 20th out of 27 member states in absorbing non‑repayable support.
Despite five amendments to the RRP, the Audit Office warns that the risk of not fully absorbing Cyprus’ allocation remains, should all milestones and targets not be met by 31 August 2026, the date on which the RRF ends.
The EU may partially or fully withhold payments for any milestone or target deemed unsatisfactorily achieved. Based on information available to the Audit Office, a potential suspension could relate to the Green Taxation reform measure, for which the foreseen withheld amount could reach €50 million.
GSI: Missed timelines and unused loans
Under the RRF, Cyprus could have used a €200.32 million loan facility, linked to seven measures. No request for loan disbursement was ever submitted, and under the fifth amendment the facility will not be used, as six of the measures linked to it were removed from the plan.
Half of the unused loan – €100 million – was intended for the Greece-Cyprus electricity interconnection ‘Great Sea Interconnector’ (GSI), a project now considered impossible to implement within the RRF timeframe, as it has not even begun. The €26.04 million pre‑financing that has already been disbursed will be offset against future grant payments.
The Audit Office notes that the RRF loan, offering financing under more favourable terms than market borrowing or European Investment Bank lending, should have been utilised.
It concludes that the fifth amendment “reinforces the view that the original plan contained weaknesses and was overly optimistic” and highlights the need for improved planning and management procedures for future EU funding programmes.
Because the amendment was adopted after the audit had been completed, the remaining risks and the likelihood of non‑absorption of the outstanding funding have not yet been assessed.
As of August 2025, absorption stood at around 56%. The Directorate‑General for Growth remains optimistic that Cyprus will meet its final absorption target.
What is the RRF
The Recovery and Resilience Facility is a temporary EU funding instrument worth €723.8 billion, designed to help member states address the economic and social impact of the COVID‑19 pandemic, strengthen resilience and prepare for green and digital transitions, as well as national challenges identified under the European Semester.
Cyprus’ RRP initially comprised €1.02 billion in grants and €200.32 million in loans. Following the December 2025 amendment, the loan component was removed, leaving the plan’s budget at €1.02 billion. The RRP approved in July 2021 included 133 measures: 75 investments and 28 reforms.
Last Thursday, the government submitted seven bills to Parliament to meet an RRP‑related milestone required for releasing the seventh grant instalment. For the sixth instalment, it also submitted a bill and regulations introducing a landfill tax for municipal waste.