Evaluations
Date: 07 oct 2016
Period: 2007-2013
Theme: Evaluation, Structural Funds management and Governance
Languages: en
After the significant economic expansion experienced between 2000 and 2007, Cyprus was hit severely by the global economic and financial crisis. Between 2007 and 2011, growth slowed down and GDP stagnated. Between 2011 and 2014, the country went into recession, with an adverse effect on the employment rate, which declined by almost 10 percentage points between 2007 and 2013, and on unemployment which increased fourfold over the period.
The consequences of the recession on public finances were also substantial. From 2009 on, the public sector balance was in large deficit, forcing Cyprus to resort to the European Stability Mechanism (ESM) and IMF funding, leading to the application of structural reforms to contain the deficit and government borrowing. In the process, government investment was cut markedly. Nevertheless, public debt doubled in relation to GDP, increasing from 54% in 2007 to 109% in 2015 mainly because of support of banks.
Over the 2007-2013 period, economic development continued to be concentrated in urban centres and coastal areas rather than in other parts of the island. ERDF and Cohesion Fund support amounted to EUR 493 million, representing
0.4% of GDP, an average of EUR 86 per head. Funding was strongly focussed on the Environment, urban development, tourism and enterprise support. Over the period, funding was shifted away from RTD and innovation and Culture and Social infrastructure to urban development, tourism and support of enterprise investment. By the end of March 2016, payments had been claimed for 93% of available funding, implying that all of the latter will probably be absorbed.