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EU Cohesion Policy: more than €1 billion for Cyprus for economic and social development 2021-2027

The Partnership Agreement lays down Cyprus' investment strategy for its economic, social and territorial cohesion, the green and digital transition and the development of a competitive, socially inclusive and sustainable growth model. At the same time, the Just Transition Plan will alleviate the impact of the energy and climate transition on the local economy and society.

Along with the Partnership Agreement, Cyprus is the first country to have its Cohesion Policy operational programme approved for the European Regional and Development Fund (ERDF) the Cohesion Fund, the Just Transition Fund (JTF) and the European Social Fund Plus (ESF+).

A green and digital economy Over €387 million from the ERDF will go to the green transition via investments in energy efficiency, renewables and the reduction of carbon emissions in line with the European Green Deal.

Important investments will focus on the development of the circular and sustainable economy, the preservation of the local biodiversity and on the adaptation to climate change and related events like floods and wildfires. Cyprus will also devote €147 million to enhance the competitiveness and develop the digitalisation of its small and medium-sized businesses and to connect national research and innovation systems with business. Through these investments, the country aims to create over 2485 new jobs, including 885 in research and 133,000 new users of public digital services.

Support for a just green transition The JTF, with a dedicated budget of €101 million, will help Cyprus with its energy transition process towards the 2030 and 2050 targets. Investments from the JTF will strengthen the energy transmission and distribution systems to allow for storage technologies and transition towards renewable energy. The JTF will also support measures for small and medium-sized businesses to apply new technologies and increase the use of renewable energy sources. Additionally, it will empower human capital through education and training actions, including the creation of a Green Technical School in Nicosia.

A Green Technical School will also provide upskilling and reskilling to train young people in green technologies and skills, filling a gap in the country's existing Secondary Technical Education.

Socially inclusive economic development The ESF+ will invest €222 million in labour market policies and skills development and strengthen social cohesion in the country.

Investments will target far-reaching reforms and actions aimed at reinforcing youth support, improving the labour market relevance of education and training, restructuring social welfare services and combatting social exclusion with a significant budget allocation of €87 million for the latter. This will contribute to achieve Cyprus's 2030 targets under the European Pillar of Social Rights, namely, to increase participation in employment (from 74.9% to 80%) and in annual adult learning (from 44.8% to 61%) and to curb poverty (10 000 fewer people).

Key initiatives will support the youth employability, the modernisation of public employment services and the development of technical vocational education and training. For example, support to young people will be extended through the ALMA innovative initiative (Aim Learn Master Achieve) and the individual learning accounts for young NEETs with a budget allocation of €5 million.

These measures will target 3440 people looking for employment while 1000 people will complete training classes. In addition, almost 40 schools will benefit from education and integration actions. For the most vulnerable, food aid will be given to 144,000 children in need.

Sustainable fisheries €38.3 million from the European Maritime Fisheries and Aquaculture Fund will promote sustainable fisheries and the restoration and conservation of aquatic biological resources, sustainable aquaculture, and the development of local coastal fisheries communities and the implementation of international ocean governance.

Members of the College said: Commissioner for Cohesion and Reforms, Elisa Ferreira, said: “The Cohesion Policy investments will strengthen the economy of Cyprus and enhance competitiveness and diversification of the local business activities with a particular focus in addressing social and environmental challenges. Cohesion Policy funding will improve the quality of life of the citizens of Cyprus.”

Commissioner for Jobs and Social Rights, Nicolas Schmit, added: “It is encouraging that the European Social Fund Plus in Cyprus will provide educational support and training to young people and disadvantaged groups to help them enter the labour market. It will also invest funds into skills development of the people and tackling social exclusion and poverty. This funding makes a crucial contribution towards improving the living and working conditions of the people in line with the European Pillar of Social Rights.”

Commissioner for Environment, Oceans and Fisheries, Virginijus Sinkevičius, said: “For the Mediterranean Member States the sustainable development of the blue economy is a crucial issue in need of support. This Partnership Agreement will create favourable conditions for the sustainable development of fisheries, aquaculture, maritime and coastal activities in Cyprus, by supporting the green and digital transition of the fisheries and aquaculture sectors. It also offers alternative solutions for the blue economy in the Cypriot coastal communities and contributes to the international governance of the ocean in the East Mediterranean.”

Background The Partnership Agreement covers the Cohesion Policy funds (ERDF; ESF+, the Cohesion Fund) including the JTF and the EMFAF.

The Partnership Agreement paves the way for the implementation of these investments on the ground. It covers 2 programmes (Cohesion Policy operational programme ‘Thalia 2021-27' adopted today and the EMFAF programme) and 4 INTERREG programmes (concerning cross-border cooperation). It also establishes the eligibility and implementation of the Just Transition Fund in the areas most negatively impacted by the climate transition. Moreover, the Partnership Agreement reflects Cyprus's strong commitment to the coordinated use of the Cohesion Policy funds with the Recovery and Resilience Facility.

Under Cohesion policy, and in cooperation with the Commission, each Member State prepares a Partnership Agreement, a strategic document for programming investments from the Cohesion Policy funds and the EMFAF during the Multiannual Financial Framework. It focuses on EU priorities, laying down the strategy and investment priorities identified by the Member State, and it presents a list of national and regional programmes for implementation on the ground, including the indicative annual financial allocation for each programme.

The Partnership Agreement with Cyprus is the 13th to be adopted following those of Greece, Germany, Austria, Czechia, Lithuania, Finland, Denmark, France, Sweden, the Netherlands, Poland and Bulgaria.

The JTF supports the territories most affected by the transition towards a climate-neutral economy. The identification of these territories is specified in Territorial Just Transition Plans (TJTPs) and is carried out through a dialogue with the Commission in the framework of the negotiations of the 2021-2027 Partnership Agreements and the associated programmes. The Plans, developed in close consultation with local partners, set out the challenges in each territory, as well as the development needs and objectives to be met by 2030. They also identify the types of operations envisaged along with specific governance mechanisms.

The approval of the Plans opens the door to dedicated financing under the other two pillars of the Just Transition Mechanism: a just transition scheme under InvestEU and a Public Sector Loan Facility for Just Transition that combines Commission grants with European Investment Bank loans.

Upon request by the Cypriot Authorities, the Commission provided tailor-made technical expertise for the preparation of the TJTPs. Support included the analysis and assessment of the social, economic and environmental impact of the transition, as well as an action plan to ensure the just transition in Cyprus. The support was provided by the Technical Support Instrument under DG REFORM.

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