The value of loans managed outside Cyprus’ traditional banking sector continued to increase in the first quarter of 2026, highlighting the scale of the island’s loan servicing market and the continued burden of distressed debt on households and businesses.

Loan Portfolio Expands By €256 Million

According to figures released by the Central Bank of Cyprus (CBC), the contractual balance of loans managed by Credit Acquiring Companies and Credit Servicing Companies reached €19.61 billion as of March 31, 2026. That was €256 million, or 1.3%, higher than the €19.35 billion recorded at the end of 2025.

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Growth was driven primarily by larger household and non-financial corporate portfolios, which accounted for most of the quarterly increase.

Households And Businesses Carry The Largest Burden

Household loans under management totalled €9.67 billion, including €662 million in performing loans and €9.01 billion classified as non-performing. Those exposures related to 55,044 households.

Loans to non-financial corporations amounted to €9.24 billion, comprising €403 million in performing exposures and €8.83 billion in non-performing loans across 9,261 companies.

Compared with the end of December 2025, non-performing balances increased in both the household and corporate segments, while performing loans declined in each. Taken together, the figures suggest that asset quality remains under pressure even as the overall portfolio continues to expand.

Other Financial Corporations Show Modest Improvement

A more positive trend emerged among other financial corporations. Performing loans in that segment increased to €15 million from €6 million at the end of 2025, while non-performing balances edged down to €689 million from €691 million.

Overall, the segment covers 76 financial corporations.

Net Carrying Amount Highlights Recovery Expectations

Although the contractual value of the managed portfolio stood at €19.61 billion, its net carrying amount was significantly lower at €2.84 billion as of March 31, 2026.

This gap reflects the way acquired loan portfolios are valued on the balance sheets of Credit Acquiring Companies. While the contractual balance represents the full amount owed under loan agreements, including accrued interest, the net carrying amount reflects expected future cash flows after taking impairment losses and anticipated recoveries into account.

Overall, the latest data underline the continued importance of Cyprus’ loan servicing industry. While the managed portfolio continued to expand during the first quarter, the predominance of non-performing loans across both household and corporate borrowers shows that legacy debt remains a significant feature of the country’s financial landscape.

Artificial intelligence and digital transformation took centre stage this week as the 5th Digital Cyprus Conference 2026 brought together business leaders, policymakers, technology experts and internationally recognised speakers in Nicosia to discuss how emerging technologies are reshaping the future of business.

AI Takes Centre Stage In Cyprus’ Digital Agenda

Organised by the Cyprus Information Technology Enterprises Association (CITEA) and IMH, the conference explored how artificial intelligence is transforming industries, changing the way businesses operate and creating new opportunities for growth across the economy.

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Addressing the event, Deputy Minister of Research, Innovation and Digital Policy Nicodemos Damianou highlighted the strategic role of digital transformation and AI adoption in strengthening Cyprus’ long-term competitiveness.

Business Leaders Examine The Next Wave Of Transformation

Building on that theme, speakers from Cyprus and abroad shared insights into the latest developments in digital technologies, focusing on the strategies businesses can adopt to remain competitive in an increasingly technology-driven marketplace.

Alongside the conference programme, participants also explored an outdoor technology exhibition showcasing innovative products, services and digital solutions from companies across the sector.

CITEA Says AI Is No Longer Optional

Reflecting on the discussions, CITEA President Giorgos Malekkos said the conference demonstrated not only how rapidly artificial intelligence is evolving, but also how businesses are already putting the technology into practice while preparing for the opportunities it is expected to create in the years ahead.

“AI is here to stay and was the central theme of the conference, a topic that will continue to be highly relevant in the years ahead,”

he said.

Malekkos added that CITEA and its members stand ready to help businesses take the next step by supporting the adoption and effective use of artificial intelligence.

A Growing Platform For Cyprus’ Digital Ecosystem

This year’s event once again reinforced the conference’s role as one of Cyprus’ leading forums for the business and technology community. By bringing together policymakers, industry leaders and technology providers, it provided a platform for exchanging ideas, sharing expertise and building new partnerships across Cyprus’ growing digital ecosystem.

The financial impact of the Middle East crisis is becoming increasingly visible in Cyprus’ tourism sector. Following the release of April tourism revenue data by the Cyprus Statistical Service (Cystat), the industry has lost more than €150 million in revenue across March and April alone, although strong performance at the start of the year helped soften the overall decline.

March And April Deliver The Heaviest Blow

The downturn gathered pace after the drone incident near the British Bases in the early hours of March 1. From that point, both tourist arrivals and revenue weakened sharply, driven largely by a collapse in visitors from Israel, then Cyprus’ second-largest source market and one of its highest-spending.

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According to the Travel Survey, tourism receipts fell to €197.5 million in April 2026, down 35.1% from €304.2 million a year earlier. Over the first four months of the year, revenue totalled €443 million, compared with €582.5 million during the same period of 2025, representing a decline of 23.9%.

The deterioration had already begun in March, when tourism receipts dropped 33.8% year on year to €85.6 million from €129.4 million, reducing revenue by €43.8 million. April brought an even larger setback, with losses reaching €106.7 million. Together, the two months wiped €150.5 million from Cyprus’ tourism industry.

Strong Early-Year Performance Limited The Damage

The overall picture would have been considerably weaker without a strong start to the year. Between January and February, tourism receipts increased to €159.9 million from €148.9 million in the corresponding period of 2025, an increase of 7.4%.

Those gains helped cushion the losses that followed, but they were not enough to offset the impact of regional instability. Reduced flight schedules, weaker traveller confidence and negative international publicity continued to weigh heavily on bookings throughout the spring.

Signs Of Recovery In May

More recent data, however, suggest the market may be stabilising. Tourist arrivals reached 455,680 in May, down 4.9% from 479,160 in May 2025, but the headline figure masks a notable recovery in one of Cyprus’ most important source markets.

Arrivals from Israel rebounded to 53,649, accounting for 11.8% of all visitors during the month. That compares with just 1,537 Israeli arrivals in March, when the drone incident and the broader regional escalation severely disrupted travel. Numbers recovered to 15,997 in April before surpassing the previous year’s level in May, when Cyprus had welcomed 45,249 visitors from Israel.

Parliament Turns Its Attention To Tourism

The impact of the Middle East crisis is also expected to feature prominently in Parliament. The House Committee on Energy, Commerce, Industry and Tourism is examining how the regional situation has affected Cyprus’ tourism sector, along with possible support measures for businesses.

Among those expected to participate are Deputy Minister of Tourism Kostas Koumis, representatives of hotel associations, travel agents, Hermes Airports, local authorities, tourism development organisations and businesses operating across the hospitality and leisure sectors.

Koumis: April Decline Was Expected

Deputy Minister of Tourism Kostas Koumis said the sharp fall in April tourism receipts was not unexpected, given that the month followed the severe disruption experienced in March.

In a written statement, he noted that the comparison was particularly challenging because April 2025 had been the strongest April on record for Cyprus’ tourism industry, with arrivals exceeding 400,000 for the first time. By contrast, April 2026 was marked by regional conflict, negative international media coverage, reduced flight schedules and broader uncertainty across the travel market.

Koumis also pointed to the so-called jet fuel crisis, which created additional pressure on aviation and tourism across Europe amid concerns over fuel supplies, further weighing on booking activity.

Despite those challenges, he said the improvement seen in subsequent months suggests that the measures introduced by the government and the tourism industry are beginning to have an effect, with the sector gradually moving towards a more stable footing.

Cyprus’ annual inflation accelerated to an estimated 4% in June 2026, widening the gap with the euro area, where price growth continued to ease, according to flash estimates released on Tuesday by Eurostat.

Domestic Prices Move Higher

Consumer prices in Cyprus increased by 0.8% compared with May, based on the Harmonised Index of Consumer Prices (HICP), as inflationary pressures gathered pace across the domestic economy.

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That contrasted with the broader euro area, where annual inflation is estimated to have slowed to 2.8% in June from 3.2% in May, extending the bloc’s gradual disinflation trend.

Cyprus Moves Further Above The Euro Area Average

The latest figures leave Cyprus well above the euro area’s average inflation rate, highlighting a divergence between domestic price developments and those across the single currency bloc. While inflation continued to moderate in much of the eurozone, price growth accelerated on the island.

Across the euro area, energy remained the largest contributor to inflation, posting an annual increase of 8.7% in June. Although still elevated, that represented a slowdown from 10.8% in May.

Services inflation also eased, falling to 3.2% from 3.5% a month earlier.

Food And Industrial Goods Show Softer Growth

Price growth moderated in several other categories as well. Inflation for food, alcohol and tobacco slowed to 1.6% from 1.9% in May, while non-energy industrial goods remained unchanged at 0.9%.

A Sharp Reversal From Spring

June’s reading marks a notable shift from earlier in the year. In March, Cyprus recorded one of the lowest inflation rates in the European Union at 1.5%, reflecting relatively subdued price pressures at the time.

Since then, inflation has accelerated as the impact of the conflict in the Middle East and Gulf region, particularly through higher energy costs, has become increasingly visible in consumer prices.

With annual inflation now reaching 4%, Cyprus has moved well above the euro area average, suggesting that imported cost pressures are playing a growing role in domestic inflation.

Cyprus’ retail sector continued to build momentum in May, with both sales values and volumes rising strongly, highlighting resilient consumer spending across a broad range of categories, according to data released by the Cyprus Statistical Service (Cystat).

Turnover Value And Volume Both Move Higher

The retail trade turnover value index increased 9.8% year on year in May, while the turnover volume index rose 7.5% compared with the same month in 2025. Together, the figures suggest that consumers not only spent more but also purchased greater volumes of goods across the retail sector.

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Fuel And Household Goods Lead Value Growth

The strongest increase in turnover value came from automotive fuel, which climbed 20.9% compared with a year earlier.

Other household equipment, a category that includes building materials, carpets, furniture, electrical appliances and lighting, recorded the second-largest gain at 12%, reflecting continued demand for home-related purchases.

Educational and recreational goods, including books, stationery, sporting equipment and toys, also posted solid growth, with turnover value rising 10.1%.

Clothing, Technology And Household Equipment Drive Volume

Measured by sales volume, clothing and footwear delivered the strongest performance, advancing 19.4% year on year. Information and communication equipment followed with a 17.6% increase, while other household equipment recorded a 13.3% gain.

Not every segment shared in the broader upswing. Sales volumes of automotive fuel declined 3.8%, while flowers, plants, watches, jewellery, optical goods and second-hand items fell 2.1%.

Year-To-Date Growth Remains Positive

The positive trend extended across the first five months of the year. Between January and May, the retail turnover value index increased 7.1% compared with the same period of 2025, while the turnover volume index rose 5.9%.

Taken together, the latest figures indicate that Cyprus’ retail sector continues to benefit from resilient consumer demand. Although some categories remain under pressure, spending has remained broad-based across both essential goods and discretionary purchases, supporting steady growth in the market.

Cyprus may be placing growing emphasis on political progress at the expense of commercial returns in its natural gas strategy, according to energy expert Dr Charles Ellinas, who warned on Wednesday that the government appears increasingly willing to grant concessions to multinational energy companies to keep offshore projects moving.

His comments came after ExxonMobil and QatarEnergy declared the Pegasus and Glaucus fields in Block 10 of Cyprus’ exclusive economic zone (EEZ) to be commercially marketable. While the announcement marks an important milestone in the development process, Ellinas cautioned that it should not be interpreted as a final commitment to move ahead with production.

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Marketable Does Not Mean Approved For Development

Speaking to the Cyprus News Agency, Ellinas said the companies were effectively meeting a procedural deadline after confirmatory drilling established the commercial viability of the discoveries.

“This does not mean that it will proceed with development,” he said, noting that a final investment decision is unlikely before 2029 and that exports are not expected to begin before 2033.

For Ellinas, the more important question is not whether the fields have been declared marketable, but under what commercial terms they will eventually be developed. After years of delays, he argued, the government appears increasingly focused on demonstrating progress while paying less attention to the long-term economics that will ultimately determine the value of the projects.

Concessions May Be Rising As Margins Tighten

That concern is closely linked to the economics of future gas exports, which Ellinas believes are becoming increasingly challenging. He noted that ExxonMobil has already signed memorandums of understanding with Egypt to transport Cypriot gas through Egyptian infrastructure, potentially via the Segas liquefaction terminal in Damietta or a planned new terminal in Port Said.

Even so, he questioned whether those export routes would generate sufficiently attractive returns.

“Based on the liquefied natural gas prices expected at the time ExxonMobil starts exporting, the margins are small. For it to become commercially viable, Cyprus must make concessions,”

he said.

According to Ellinas, industry developments suggest the government has already granted significant concessions, potentially leaving the state with only a modest share of future profits if LNG prices remain weak and Brent crude prices also soften.

In his view, the negotiating dynamic can easily become self-reinforcing. Once governments begin relaxing commercial terms to preserve project momentum, companies often return seeking additional concessions.

Commercial Reality Is Catching Up With Political Ambition

Ellinas believes Cyprus has now reached the point where political priorities are beginning to outweigh commercial considerations. After years of delays following the country’s offshore discoveries, securing an export route has become increasingly important. That urgency, he warned, could weaken the government’s negotiating position.

He pointed to Italian energy company Eni, which has yet to reach a final investment decision on the Kronos field in Block 6 of Cyprus’ EEZ. Although the technical studies have reportedly been completed, the continued delay suggests commercial issues remain unresolved.

“It seems that the problems are continuing, so that the company cannot announce a final investment decision,”

he said, adding that Eni may also be seeking additional concessions.

Global LNG Supply Could Push Prices Lower

The broader market outlook may make those negotiations even more difficult. Ellinas expects global LNG supply to increase by as much as 40%, a development that would likely place significant downward pressure on prices.

“With those huge quantities entering the market, it is expected that LNG prices will decrease considerably,”

he said.

That outlook, he added, is also likely to influence future discussions with Chevron, which holds rights to Block 12 alongside Israel’s NewMed Energy and BG Group, owned by Shell. Block 12 contains the Aphrodite gas field.

According to Ellinas, Chevron previously estimated that developing and exporting Aphrodite would cost around €4 billion without a floating processing platform. Cyprus later requested that such a platform be included, and the company agreed. Even so, he believes negotiations are unlikely to end there.

“I believe they will come and start asking us for more concessions,” he said. “I hope they do not, but I am worried about it.”

ExxonMobil’s Wider Position In The East Mediterranean

Ellinas also highlighted ExxonMobil’s expanding footprint in the eastern Mediterranean, noting that the company now controls a substantial strategic area through its interests in Blocks 4 and 10A. In his view, that gives the company greater flexibility when assessing future discoveries and export options.

He said drilling in the new blocks remains strategically important, even though Pegasus and Glaucus already contain sufficient gas to support exports to Egypt. If additional discoveries significantly increase available volumes, Egypt’s existing infrastructure may eventually prove insufficient, creating the need for alternative export solutions.

That flexibility benefits ExxonMobil by allowing it to keep multiple development options open while postponing major investment commitments. For Cyprus, however, Ellinas warned that continued delays combined with growing concessions could ultimately leave the country with less favourable commercial terms for some of its most valuable energy assets.

Global air passenger demand fell 2.2% year on year in May as the conflict in the Middle East continued to weigh on the aviation sector, according to the International Air Transport Association (IATA). Measured in revenue passenger kilometres (RPKs), demand declined alongside a 2.3% reduction in capacity, measured in available seat kilometres (ASKs). Even so, airlines continued to fill more seats on average, pushing the global passenger load factor up 0.1 percentage points to a record 83.5% for the month.

According to IATA, the overall decline was largely driven by the Middle East. Excluding the region, global passenger demand would have increased by 0.7%.

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Middle East Disruption Distorts The Global Picture

The gap between international and domestic markets became more pronounced in May. International passenger demand declined 1.6% year on year as capacity fell 2.4%, yet the international load factor still improved by 0.7 percentage points to 83.7%. Without the disruption in the Middle East, international demand would have risen 3.1%.

Domestic markets, by contrast, remained under greater pressure. Revenue passenger kilometres fell 3.1% from May 2025, while capacity declined 2.1%, bringing the domestic load factor down 0.8 percentage points to 83%.

IATA Director General Willie Walsh said the conflict in the Middle East continued to have the greatest impact on airlines in the region. Middle Eastern carriers recorded a 28.4% year-on-year decline in passenger demand in May, although that represented a marked improvement from the 46.6% drop reported in April.

“That’s a significant improvement on the 46.6% decline recorded for April, a sign of the region’s resilience,” Walsh said.

He added that North America and Asia also experienced year-on-year declines, driven largely by weaker domestic markets in the United States and China.

Fares, Fuel And Margin Pressure

Despite those headwinds, Walsh said passenger demand remained “largely resilient,” although the impact of the conflict is likely to persist.

He pointed to the recent decline in oil prices as an encouraging development but cautioned that uncertainty surrounding supply through the Strait of Hormuz remains a significant risk. Even if crude prices continue to ease, it will take time before lower costs are reflected in jet fuel prices.

With airlines operating on margins of around 2%, Walsh said carriers have little choice but to continue testing passenger demand with higher fares as they seek to offset elevated fuel costs.

Regional Performance Shows A Split Market

Performance varied considerably across regions, highlighting the uneven impact of current market conditions.

Africa recorded the strongest overall passenger growth in May, with demand rising 6.6% year on year as capacity increased 7%. Even so, the region’s load factor slipped 0.3 percentage points to 73.7%.

Latin America and the Caribbean also delivered solid results, posting 6.1% growth in passenger demand alongside a 4.6% increase in capacity. As a result, the regional load factor improved by 1.2 percentage points to 83.4%.

European airlines remained in positive territory, reporting a 2.7% increase in passenger demand while expanding capacity by 1.8%. The region also achieved the highest load factor worldwide at 85.9%, up 0.8 percentage points from a year earlier.

Elsewhere, the picture was weaker. Asia-Pacific, the largest aviation market by share, saw demand decline 1.4% as capacity fell 2.4%, although its load factor still rose by 0.9 percentage points to 84.3%.

North America also recorded softer results, with demand slipping 0.8% while capacity was broadly unchanged, edging up 0.1%. That left the region’s load factor at 82.8%, down 0.7 percentage points from May 2025.

The Middle East remained by far the weakest-performing region. Passenger demand fell 28.4% year on year, while capacity declined 23.9%, pushing the regional load factor down 4.7 percentage points to 75.9%.

International Markets Show Greater Resilience

International travel proved more resilient than domestic markets in May. According to IATA, the pace of decline moderated compared with April, while several regions recorded their highest-ever May load factors. The Middle East was the only region to see its international load factor decline.

Asia-Pacific airlines increased international passenger demand by 1.3% despite a 1.1% reduction in capacity, lifting the regional load factor by 2 percentage points to 85.3%. IATA said tighter restrictions on jet fuel imports in Vietnam contributed to significant cuts in short-haul capacity, resulting in weaker intra-Asia international traffic.

European carriers also delivered solid results. International demand rose 3.8% as capacity expanded 2.3%, pushing the load factor up 1.2 percentage points to 85.4%. IATA also highlighted a 15% increase in direct traffic between Europe and Asia, reflecting a continued shift towards non-stop routes.

North American airlines reported more modest growth, with international demand increasing 1% and capacity rising 0.6%. That helped lift the regional load factor by 0.4 percentage points to 84%.

The Middle East remained the weakest-performing international market. Passenger demand fell 28.8% year on year, while capacity declined 24.3%, reducing the international load factor by 4.8 percentage points to 76.1%. Although comparisons with last year continue to reflect the impact of the conflict involving Iran, IATA said conditions improved compared with April, with the pace of decline almost halving month on month.

Latin American airlines posted the strongest international performance, with demand rising 10.5% alongside a 9% increase in capacity. African carriers also recorded healthy growth, with international demand up 8.9% and capacity increasing 8.3%, lifting the regional load factor to 73.4%.

Domestic Markets Remain Under Pressure

Domestic aviation continued to face greater headwinds in May, with IATA reporting a 3.1% decline in revenue passenger kilometres across domestic markets.

China recorded the sharpest slowdown, with passenger demand falling 6.2% as capacity declined 5.5%. According to IATA, the weaker performance may have reflected both higher airfares and the timing of the Dragon Boat Festival, which took place in June this year rather than May.

The United States also saw domestic demand weaken. Passenger traffic declined 1.9%, while capacity slipped 0.3%, bringing the domestic load factor down 1.4 percentage points to 81.8%.

India remained the strongest domestic aviation market, with demand rising 10.1% and capacity increasing 7.9%. The country’s load factor improved by 1.7 percentage points to 85.5%.

Brazil and Japan also remained in growth territory, with domestic demand increasing 2.8% in both markets. Australia, meanwhile, was broadly unchanged, with demand edging down 0.1% and capacity declining 0.3%.

Residential photovoltaic systems in Cyprus are entering a new phase. The transition from net metering to net billing, growing curtailments of renewable generation, the increasing role of battery storage, changes to subsidy schemes and the launch of the competitive electricity market are reshaping the economics of rooftop solar for thousands of households.

Those changes have direct implications for both existing and prospective solar owners. They affect the financial performance of residential systems while raising practical questions about self-consumption, electricity exports and whether investing in battery storage now makes economic sense.

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Drawing on publicly available information and updates from the relevant energy authorities, the following overview outlines the most important developments and answers some of the questions most frequently raised by residential consumers.

From Net Metering To Net Billing

For years, net metering has been the standard model for residential photovoltaic systems in Cyprus. Publicly available data indicate that around 100,000 households currently operate under the scheme, with a combined installed capacity of approximately 450 MW, representing about 43% of the country’s total solar capacity.

From 1 January 2026, however, new residential solar installations will no longer qualify for net metering and will instead be connected under the net billing framework. The change fundamentally alters how electricity is valued, making it increasingly important for prospective investors to reassess the economics of a new installation.

Why The Difference Matters

The key difference between the two systems lies in how imported and exported electricity is settled.

Under net metering, electricity imported from and exported to the grid is offset on a bi-monthly basis using energy quantities. Any surplus generation is carried forward to the next settlement period, while electricity shortfalls are billed at the applicable retail tariff. Depending on the contract, accumulated surpluses are generally reset without compensation after three years.

Net billing works differently. Settlement is based on the monetary value of electricity rather than the amount of energy generated. Power exported to the grid is compensated at the wholesale price, while electricity imported from the grid is charged at the retail tariff. In practice, households sell electricity at a lower price than they pay to buy it back, making self-consumption significantly more valuable than under the previous system.

Why Storage Is Becoming More Important

Battery storage increases self-consumption by storing surplus solar energy for use later in the day, when photovoltaic panels are no longer generating electricity. That makes storage considerably more valuable under net billing, where maximising on-site consumption has a greater impact on overall savings.

Even so, installing batteries remains an investment decision that depends on installation costs, system size and future technology prices. For many households, however, battery storage is evolving from an optional upgrade into an increasingly important tool for protecting long-term returns.

What Happens To Existing Net Metering Contracts

Existing net metering agreements remain valid until they expire, typically after 15 years, and are not affected by the rules governing new installations.

Once those agreements come to an end, homeowners will be able to move to net billing or consider other options available under the competitive electricity market.

What Happens To Accumulated Surpluses

Most net metering agreements provide for accumulated energy surpluses to be reset after one or three years, depending on the terms of the contract. Some older agreements still provide compensation for unused surpluses, although such arrangements have become increasingly uncommon.

At the beginning of 2026, EPC Supply decided, under the framework of the 2024 renewable energy grant scheme, that accumulated surpluses would be reset without compensation. The company also decided that the reset would recur every three years for all affected contracts.

The decision prompted strong reactions from residential solar owners, leading to parliamentary debate and a presidential referral. The matter is now awaiting a final decision by the Council of Ministers.

Are New Support Schemes Available

The policy shift is also reflected in changes to government support programmes. The popular Fotovoltaika Gia Olous scheme ended on 31 December 2025, and no replacement grant programme is currently available.

A new scheme, Anavathmizo – Exoikonomo, is expected to launch in September 2026 with a budget of €20 million. It will focus on residential energy upgrades and is expected to support the installation of photovoltaic systems combined with battery storage. The approach is consistent with the European Union’s “energy efficiency first” principle, which prioritises reducing energy consumption before expanding generation capacity.

Residential Solar And The Competitive Electricity Market

Another significant change is the opportunity for residential solar owners to participate in the competitive electricity market. Under the current regulatory framework, households that are not participating in subsidy schemes may monetise surplus electricity through agreements with licensed electricity suppliers or aggregation entities operating in the market.

That creates new commercial opportunities, but it also places greater emphasis on understanding technical limitations, contractual arrangements and market pricing. As the market evolves, informed decision-making is becoming increasingly important.

Why Curtailments Happen

Curtailments remain one of the most frequently discussed issues among residential solar owners. Every electricity system must continuously balance generation with demand to maintain grid stability.

When solar production is high but electricity demand is low, the grid can experience oversupply conditions that threaten the security of supply. In those circumstances, the Cyprus Transmission System Operator may instruct the Distribution System Operator (EAC) to temporarily reduce photovoltaic generation.

Curtailments follow a specific order of priority. Large-scale solar parks are limited first, followed, where necessary, by newer residential installations. Older household systems, which account for roughly half of all residential photovoltaic installations, were connected without ripple-control equipment and are therefore not subject to curtailment.

Can Curtailments Be Avoided

One option is to operate a photovoltaic system in zero-export mode, either temporarily or permanently.

Under this configuration, the electricity generated is consumed within the property rather than exported to the grid, unless temporary exports are permitted. Whether this improves the financial outcome depends on several factors, including household consumption patterns, system size and the presence of battery storage.

Operating completely off-grid is possible only with approval from the relevant authorities and is generally limited to remote locations where a grid connection is impractical. Such systems require a technical study by a qualified electrical engineer and typically combine photovoltaic panels with battery storage. A backup diesel generator is usually required to ensure a reliable power supply.

Homeowners planning to expand or modify an existing photovoltaic installation must also obtain the necessary approvals from EAC Supply. Depending on the scope of the changes, a revised agreement or the installation of ripple-control equipment may be required.

A Market Reset For Homeowners

Residential solar in Cyprus is entering a new operating environment. Net billing, curtailments, battery storage, changes to surplus treatment and the gradual liberalisation of the electricity market are reshaping the economics of rooftop photovoltaic systems.

For households considering a new installation, understanding self-consumption, battery economics and future electricity pricing will become increasingly important. Existing system owners, meanwhile, will need to assess how evolving market rules may affect their current agreements and long-term returns.

Cyprus used its six-month Presidency of the Council of the European Union to advance key initiatives on digital policy, artificial intelligence, research and innovation, according to Deputy Minister Nicodemos Damianou, who said the country helped shape a more ambitious agenda for Europe’s technological future.

Speaking on CyBC’s Apo Mera se Mera, Damianou said the Presidency had received broad recognition from European partners, crediting careful preparation, strong coordination and effective execution throughout the six-month term.

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“The broad recognition that the Cyprus Presidency has received from our European partners reflects the serious preparation, collective effort and effective management that have characterised these six months,” he said in a statement following the interview.

A Presidency Measured By Outcomes

Damianou said the success of a Council Presidency should be measured not by the number of meetings it hosts, but by the progress it delivers. Cyprus, he argued, focused on advancing priorities that support Europe’s competitiveness in technology, research and innovation.

He said much of that agenda has been shaped by the Draghi report, published in September 2024, which warned that Europe risks falling behind unless it significantly increases investment in technological development.

Since then, the European Union has placed greater emphasis on strategic autonomy, technological independence and a single market capable of helping innovative businesses scale more effectively across member states.

According to Damianou, that challenge remains significant, with around 85% of European businesses still relying on technologies developed outside Europe, including cloud services and artificial intelligence.

A Broad And Demanding Policy Agenda

Against that backdrop, the Cyprus Presidency oversaw negotiations on a wide range of legislative and policy files covering cybersecurity, connectivity, digital infrastructure, artificial intelligence, space technologies, research and innovation.

Damianou noted that Europe’s dependence on external technologies also extends to the space sector, where many satellite capabilities continue to rely on systems developed outside the bloc.

Artificial intelligence remained at the centre of discussions. A conference held in Nicosia during the Presidency examined how member states can strengthen Europe’s technological capabilities and shape the next phase of AI development together.

Research Funding And Europe’s Next Framework Programme

Cyprus also helped move forward negotiations on the EU’s next research and innovation framework programme covering the 2028-2034 period.

Damianou described the discussions as particularly challenging because they required consensus among all 27 member states. He added that the programme is expected to have roughly double the budget of Horizon Europe, which currently stands at around €95 billion.

He said research funding is increasingly viewed as a strategic investment that supports industrial competitiveness, technological sovereignty and the retention of highly skilled talent.

Protecting Minors In A More Complex Digital World

Alongside legislative work, the Presidency also prioritised online child protection. Damianou said advances in artificial intelligence have made the digital environment more complex, increasing concerns about the safety of younger users.

Discussions focused on two key issues: setting appropriate minimum ages for access to online platforms and establishing more effective age-verification systems. He argued that relying solely on platforms to verify users’ ages has proved insufficient, as many services still depend largely on self-declaration.

Cyprus As A Showcase For Innovation

Beyond legislative work, Damianou said the Presidency provided Cyprus with an opportunity to present its own research and innovation ecosystem to European partners.

He said closer cooperation between Cypriot researchers, businesses and public officials and their counterparts across Europe was among the Presidency’s less visible but important achievements.

Cyprus also showcased ongoing work in medicine, artificial intelligence and digital technologies, reinforcing its ambition to become a regional hub for innovation, knowledge and international cooperation.

What Citizens Should Expect Next

What Citizens Should Expect Next

Looking ahead, Damianou said Cyprus will continue expanding its digital transformation agenda while placing greater emphasis on helping citizens make fuller use of services that are already available online.

He pointed to the recently launched online police service, which was used by around 850 people during its first week to obtain criminal record certificates electronically. At the same time, the long-awaited digital justice system has entered its pilot phase in cooperation with the Cyprus Bar Association and the judicial service, while additional digital projects are progressing for the Road Transport Department, the Deputy Ministry of Migration and the Registrar of Companies.

Work is also accelerating on the Digital Citizen initiative, with further developments expected over the next six months and throughout 2027. Although digital identity has already been used in elections, Damianou said wider adoption remains a priority.

He noted that around 42,000 citizens accessed online civil registry services over the past year to obtain documents such as identity cards and birth certificates. Even so, many people continue to visit citizen service centres for procedures that are already available digitally.

For Damianou, that highlights the next challenge: expanding digital services is no longer enough. Encouraging wider public awareness and greater confidence in using them will be equally important as Cyprus continues its digital transformation.

The broader objective, he added, is for Cyprus to contribute to a Europe with a stronger technological base while remaining open to international cooperation, a vision reflected in the Cyprus Presidency’s motto: “An autonomous Union, open to the world.”

The European Union is moving to close one of the most controversial loopholes in cross-border e-commerce. From July 1, the bloc will introduce a fixed €3 customs duty on low-value parcels imported from outside the EU, targeting the growing volume of online purchases from platforms such as Shein, Temu and AliExpress.

A Temporary Measure Targeting A Structural Problem

Under the new rules, parcels valued at less than €150 will be subject to the €3 charge. Until now, such shipments were exempt from customs duties under the EU’s de minimis threshold. Although they were still subject to VAT and customs declarations, they entered the bloc duty-free.

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Brussels argues that the system has become increasingly difficult to manage, putting European retailers at a competitive disadvantage while making it harder for customs authorities to enforce safety, environmental and consumer protection rules across billions of small imports.

How The €3 Duty Will Work

Rather than applying once per parcel, the charge will be based on customs classifications.

For example, a package containing a T-shirt and a pair of shoes would incur two separate €3 charges because they fall under different product categories. By contrast, several identical T-shirts shipped in the same parcel would normally attract a single €3 charge.

Designed as an interim solution, the measure is expected to remain in force from July 1, 2026, until July 1, 2028, although officials have left open the possibility of an extension if necessary.

Once the EU’s e-commerce customs data hub becomes operational, the temporary measure is expected to be replaced by the bloc’s standard customs tariffs.

Why Brussels Is Acting Now

Brussels introduced the measure following a sharp increase in low-value imports. EU data show that 4.6 billion low-value parcels entered the bloc in 2024, while almost 5.9 billion individual items were shipped directly from third countries to EU consumers in 2025.

Most of that trade is concentrated in China. According to EU figures, 91% of low-value shipments arriving in 2024 originated there, highlighting the growing influence of Asian e-commerce platforms on the European market.

Beyond competition concerns, EU institutions argue that the sheer volume of small parcels makes it increasingly difficult for customs and market surveillance authorities to verify compliance with European safety, environmental and consumer protection rules.

Particular scrutiny has focused on toys, cosmetics, electronics, food supplements and personal protective equipment sold directly to consumers through non-EU platforms.

Targeted inspections carried out across the EU in 2025 found that more than 60% of products checked in those categories failed to comply with EU standards because of issues such as missing labels, prohibited ingredients or inadequate safety documentation, according to the European Commission.

The Wider Policy Goal: Fairness, Safety And Enforcement

According to the Council of the European Union, the new measure is intended to address “unfair competition for EU sellers, health and safety risks for consumers, high levels of fraud and environmental concerns.”

More broadly, the initiative reflects a shift in Brussels’ approach. Rather than treating low-value e-commerce imports as a niche customs issue, policymakers increasingly view them as a broader challenge for market integrity, consumer protection and regulatory enforcement.

Who Pays The Charge?

Although the €3 duty applies to businesses, consumers could ultimately bear the cost if online platforms pass it on through higher prices, delivery fees or other charges.

According to the European Commission, the duty is not a tax on consumers. Legal responsibility rests with the declarant, such as the seller, importer, IOSS holder or their representative, while consumers are expected to become liable only in limited circumstances.

A separate handling fee is also being considered as part of the wider customs reform. The final amount is expected to be agreed before member states begin applying it, no later than November 1, 2026.

What It Means For Shoppers In Cyprus And Across The EU

For shoppers in Cyprus and elsewhere in the EU, the most noticeable impact will be on low-cost purchases from non-EU platforms. Small orders may become slightly more expensive, while parcels containing different categories of products could incur multiple €3 charges.

Timing will also be important. As with other imports from third countries, customs duties are generally determined when goods enter the EU customs system and are cleared, rather than when the order is placed.

A similar principle already applies to larger imports, including passenger vehicles imported into Cyprus from outside the EU. Customs charges arise when the vehicle enters the country and is cleared, with passenger cars generally subject to a 10% import duty and 19% VAT.

Simply placing an order before July 1 may therefore not be enough to avoid the charge if the parcel arrives and is cleared after the new rules take effect. The purchase date alone does not determine whether the duty applies.

For online shoppers, the practical assumption is straightforward: if a parcel from a non-EU country is released through EU customs on or after July 1, the new €3 charge may apply, even if it was ordered earlier.

How Platforms May Respond

Online retailers may seek to reduce the impact by importing goods into European warehouses in bulk before distributing them to customers. In that case, products would no longer enter the EU as individual low-value parcels, although they would still be subject to the standard customs procedures and duties that apply to larger commercial shipments.

One of the policy’s objectives is to encourage larger, more traceable consignments. That would allow customs authorities to inspect imports more efficiently instead of processing millions of individual parcels arriving through airports and ports across the bloc.

For the EU, the measure is intended to strengthen enforcement as much as raise revenue, giving customs authorities greater oversight of a system that has become increasingly difficult to manage.