European Commission issues 2026 economic recommendations for Cyprus

The European Commission has issued five key recommendations to Cyprus as part of the 2026 European Semester. While acknowledging the current budget surplus, the Commission mandates that Cyprus adheres to strict net expenditure growth limits set at 6.0% for 2025, 5.0% for 2026, 5.4% for 2027, and 4.3% for 2028. Cyprus is urged to fully utilize the €1.02 billion Recovery and Resilience Fund, with over 50% remaining and 85 milestones still pending. The report emphasizes the need to increase defense spending and efficiency while maintaining structural budgetary adjustments. For the first time, the Commission specifically highlighted the necessity of improving the efficiency of the judicial system through digitalization and full operational capacity. Additional recommendations include addressing labor market shortages, promoting gender equality, and accelerating the energy transition. Furthermore, the Commission calls for social housing improvements and better water and waste management practices.