The Cyprus Fiscal Council has raised serious concerns over the implementation of major state development projects, highlighting persistent weaknesses in budget execution and the allocation of public funds.
According to the council, the 2027 state budget includes substantial allocations for projects that recorded little or no expenditure in 2026, while investment in key development priorities remains limited.
During the examination of the budget by the House Finance Committee on Monday, 12 October, the council’s chairman, Andreas Charalambous, questioned whether projects were sufficiently prepared before being included in the state budget.
“Either projects are included in the budget before they are ready, with provisions that cannot be implemented, or there are problems with their implementation,” he said.
Four major projects recorded zero expenditure
Figures presented by the Fiscal Council reveal that four of the six major development projects allocated funding in the 2026 budget recorded no expenditure during the first half of the year. The remaining two recorded only limited implementation.
Despite this, several of the projects have received fresh allocations in the 2027 budget.
The projects with zero expenditure during the first six months of 2026 were:
- Deneia-Akaki-Astromeritis road: With an estimated total cost of €164.2 million, the project was allocated €7.7 million in the 2026 budget but recorded no expenditure during the first half of the year. A further €15.9 million has been included in the 2027 budget.
- Nicosia Courthouse: The project has an estimated total cost of €119 million. Although €400,000 was allocated in 2026, no expenditure was recorded during the first six months. No allocation has been included for 2027.
- First section of the Paphos-Polis Chrysochous motorway: The project, estimated to cost €107.3 million, received an allocation of €19.1 million for 2026 but recorded no expenditure during the first half of the year. Another €18 million has been allocated for 2027.
- New State General Laboratory building: With an estimated total cost of €106.5 million, the project received €2.9 million in the 2026 budget but recorded no expenditure during the first six months. The 2027 budget includes a further €3.4 million.
Implementation was also limited for the other two major projects examined.
The New Cyprus Museum, with an estimated total cost of €143.9 million, had used just 15% of its 2026 allocation by the end of June.
Meanwhile, the Ktizo housing scheme, with an estimated total cost of €105 million, had recorded an implementation rate of only 10%.
The findings highlight the Fiscal Council’s concerns over Cyprus development budget spending, particularly the gap between planned allocations and actual project implementation.
Development expenditure set to decline
The Fiscal Council also warned that Cyprus continues to allocate a comparatively low proportion of public expenditure to development projects compared with other European countries.
“We have a problem with quality expenditure,” Charalambous told the committee.
According to the council, spending on roads is the only development expenditure category expected to record a substantial increase in 2027.
Overall development spending, however, is projected to decline significantly over the coming years.
Development expenditure is expected to fall from €1.62 billion in the 2026 state budget to €1.16 billion in 2027, before declining further to €1.06 billion in 2028 and €1 billion in 2029.
The figures have raised concerns about the quality and long-term impact of government spending, particularly as Cyprus development budget spending shifts towards traditional infrastructure projects.
Concerns over investment after Recovery Plan
The Fiscal Council also expressed concern about declining investment in critical areas, including the energy and digital transitions, following the completion of the Recovery and Resilience Plan.
It warned that funding previously available through the European recovery programme does not appear to be replaced by equivalent allocations from national resources.
“We spent certain amounts because we had included them in the Recovery Plan. The question is whether they will remain a priority after the Plan,” Charalambous told the House Finance Committee.
“We do not see that in the budgets. The focus is on roads and infrastructure projects.”
The council’s assessment raises broader questions about whether future Cyprus development budget spending will adequately support strategic priorities beyond conventional infrastructure investment.
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