Support Group for Cyprus, first Activity Report: helping Cyprus pursue reforms and restore growth
3 Apr 2014 03:56 PM
The
Support Group for Cyprus has published its first report on technical assistance
for Cyprus. The Support Group was launched by European Commission President
José Manuel Barroso in March 2013 to coordinate the technical assistance
requested by Cyprus in order to help implement specific reforms set out in its
economic adjustment programme, alleviate the social consequences of the
economic downturn and revive and diversify the economy. A specific focus has
been placed on enhancing competitiveness, job creation and economic growth in
the country. In this respect, the Support Group stands ready to assist in the
development of a comprehensive growth strategy for
Cyprus.
Vice-President Olli Rehn, responsible for Economic and
Monetary Affairs and the Euro, said: “The Cypriot authorities are
carrying out the reforms set out in the programme with commitment and
determination. These reforms are helping Cyprus to repair its financial sector,
restore healthy public finances and carry out important economic reforms, while
protecting the most vulnerable in society. The Commission will continue to
stand by the Cypriot people, not least through the Support Group for Cyprus,
which is a concrete expression of European
solidarity.”
The
experts of the Support Group assess technical assistance needs on the ground,
help design the projects to be implemented and mobilise sources of funding. The
initial technical assistance activities have been financed through the EU
budget, notably through the European Social Fund and the European Regional
Development Fund.
The
Support Group's focus is now to move projects into the implementation phase
and complete the recruitment of three experts, who will be based in the Cypriot
administration and will work in the areas of health systems and services,
public financial management, and energy markets.
The
Support Group's first activity report, which covers the period
September-December 2013, presents the state-of-play of its work in six key
policy areas: the budgetary framework and public financial management, revenue
administration, immovable property tax reform, the welfare system, healthcare
and renewable energy. The Support Group is helping to shape important reforms
in Cyprus, particularly in the areas of revenue administration, the welfare
system and healthcare:
Revenue administration
Cyprus is committed to reforming its revenue
administration to enhance its tax collection capacity and step up the fight
against tax fraud and evasion. This includes a comprehensive long-term reform
leading to the establishment of an integrated domestic tax department. The full
integration of the Inland Revenue Department and the VAT Services is expected
to be an important test case for wider public administration reform in Cyprus
to which the authorities are committed in order to improve the functioning and
cost-effectiveness of the public sector.
Technical assistance for this reform of revenue
administration in Cyprus has been provided jointly by the European Commission
(Directorate-General for Taxation and Customs Union and the Support Group) and
the International Monetary Fund (IMF).
The welfare system
The
Cypriot Government is committed in the context of the economic adjustment
programme to implementing an ambitious reform of the social welfare system by 1
July 2014. Key social and economic objectives of the reform include ensuring
the efficient use of public funds, establishing an appropriate balance between
social benefits and work incentives, securing a minimum level of income to
ensure a decent standard of living, helping to reduce inequalities, and
protecting the more vulnerable households.
A
comprehensive database and the IT requirements to support the administration of
the reformed welfare system should be in place by May 2014. The Support Group
is providing technical assistance in the design of this comprehensive IT system
which, once operational, will help centralise the competences and
responsibilities related to the administration and provision of social benefits
in the Ministry of Labour and Social Insurance and rationalise the provision of
these benefits.
Healthcare
The
planned introduction of a National Health System (NHS) presents the Cypriot
authorities with an opportunity to modernise and enhance the provision of
healthcare services in the country. The authorities have undertaken initial
steps to implement a series of reform measures to strengthen the sustainability
of the funding structures and the efficiency of healthcare provided to
patients. The Support Group is assisting in the initial phase of setting up an
integrated IT/communication system in the NHS that the country is
developing.
Background
The
Support Group for Cyprus was launched by the European Commission in March 2013.
Administratively, the Support Group is attached to the Commission's
Directorate-General for Economic and Financial Affairs. Its general
coordination is ensured by Vice-President Rehn. The Support Group, which is
based in Brussels, will be complemented by a small team of resident experts in
Nicosia. The Support Group is composed of full-time Commission staff, seconded
national experts and temporary staff. The Support Group draws on expertise and
contributions from appropriate services of the European Commission, from EU
Member States and international organisations such as the IMF.
The
Support Group has the joint mandate of:
(1)
helping to alleviate the social consequences of the economic downturn by
mobilising EU funds and by supporting the efforts of the Cypriot authorities to
restore financial, economic and social stability, and
(2)
bringing in further expertise to facilitate the emergence of new sources of
economic activity.
The
Support Group works very closely with the Cypriot authorities by providing
technical expertise to support the implementation of the economic adjustment
programme and initiatives to restore balanced and sustainable economic growth.
The Support Group is central to the Commission's efforts to support
Cyprus's reform agenda. It coordinates all technical assistance provided by
the Commission, other than technical assistance provided directly under the
Structural and Investment and other EU funds.
For more information:
The
activity report is available on the website of the Support Group for
Cyprus:
http://ec.europa.eu/economy_finance/assistance_eu_ms/cyprus/sgcy_en.htm
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Compliance report:
http://ec.europa.eu/economy_finance/publications/occasional_paper/2014/op
189_en.htm