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Cyprus Urged To Streamline Oversight Of Public Projects Amid Risks Of Delay And Cost Overruns

by THEFUTURE.TEAM

December 18, 2025

Cyprus faces mounting pressure to enhance coordination and intensify monitoring of public projects to stave off delays and spiraling costs by 2028, warns Fiscal Council President Michalis Persianis. In a candid interview with the Cyprus News Agency (CNA), Persianis pinpointed systemic weaknesses in project oversight and accountability as core drivers of inefficiency.

Structural Weaknesses And Coordination Challenges

Persianis elaborated that although there are rational explanations for projects receiving continued funding despite appearing complete, the deeper issue is a pervasive lack of rigorous monitoring. The problem is particularly pronounced in multi-ministerial initiatives where fragmented coordination increases the risk of delays and budget overruns.

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Lessons From The Private Sector

Drawing a parallel with private sector practices, Persianis highlighted that privately executed projects typically adhere to strict schedules and conduct monthly performance assessments. Such practices enable early detection of problems, offering an opportunity to address emerging issues before they escalate. As he noted, the absence of a similar framework in the public sector undermines efforts to monitor and supervise projects effectively.

Proposal For A Centralized Monitoring Platform

To remedy the current shortcomings, Persianis advocates for the establishment of a centralized mechanism supported by a dedicated platform that tracks project progress and expenditures monthly. This system, with its built-in coding that reflects both timeline adherence and budget status, would provide political leaders with real-time insights and early warnings when projects diverge from their planned paths.

Immediate Accountability And Fiscal Prudence

With overlapping responsibilities often clouding accountability, the establishment of a single, focused platform could designate clear ownership for each project. Persianis warned that interventions often come too late, as late-stage problems become politicized, thereby reducing the likelihood of pragmatic solutions. His assertive call for immediate action aligns with a broader fiscal imperative as the state budget for 2026 ushers in a period marked by economic optimism tempered with significant uncertainty.

Navigating Uncertainty In A Complex Environment

The 2026 state budget, though reflecting positive economic trends, underscores the critical need for vigilant monitoring given prevailing external and internal risks—including those associated with planned tax reforms. Persianis described the budget as fundamentally sound yet fraught with uncertainty, highlighting that inelastic expenditures offer little flexibility for reallocation. While a downward trend in public debt does provide some fiscal breathing room, the path ahead remains laden with challenges that necessitate cautious management.

In summary, the call for enhanced oversight in Cyprus is not merely a bureaucratic reform—it represents an urgent strategic adjustment necessary to ensure that public infrastructure projects are executed efficiently, transparently, and effectively in an increasingly complex fiscal landscape.

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ECB Launches Geopolitical Stress Tests For 110 Eurozone Banks

The European Central Bank is preparing a new round of geopolitical stress tests aimed at assessing potential risks to major financial institutions across the euro area. Up to 110 systemic banks, including institutions in Greece and the Bank of Cyprus, will take part in the exercise, which examines how geopolitical events could affect financial stability.

Timeline And Testing Process

Banks are expected to submit initial data on March 16, 2026. Supervisors will review the information in April, while the final results are scheduled to be published in July 2026. The process forms part of the ECB’s broader supervisory work to evaluate financial system resilience under different risk scenarios.

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Geopolitical Shock As The Primary Concern

The stress tests place particular emphasis on geopolitical risks. These may include armed conflicts, economic sanctions, cyberattacks and energy supply disruptions. Such events can affect banks through changes in market conditions, borrower solvency and sector exposure. Lending portfolios linked to regions or industries affected by geopolitical developments may face higher risk levels.

Reverse Stress Testing: A Tailored Approach

Unlike traditional stress tests that apply the same scenario to all institutions, the reverse stress test requires each bank to define a scenario that could significantly affect its capital position. Banks must identify a geopolitical shock that could reduce their Common Equity Tier 1 (CET1) ratio by at least 300 basis points. Institutions are also expected to assess potential effects on liquidity, funding conditions and broader economic indicators such as GDP and unemployment.

Customized Risk Assessments And Supervisor Collaboration

This methodology allows banks to submit risk assessments based on their own exposures and operational structures. The approach is intended to help supervisors understand how geopolitical events could affect institutions differently and to support discussions between banks and regulators on risk management and contingency planning.

Differentiated Vulnerabilities Across Countries

A joint report by the ECB and the European Systemic Risk Board indicates that countries respond differently to geopolitical shocks. The Russian invasion of Ukraine led to higher energy prices and inflation across Europe, prompting central banks to raise interest rates. Belgium, Italy, the Netherlands, Greece and Austria experienced increases in borrowing costs and lower investor confidence. Germany, France and Portugal recorded more moderate changes, while Spain, Malta, Latvia and Finland showed intermediate levels of exposure.

Conclusion

The geopolitical stress tests will not immediately lead to additional capital requirements for banks. Their results will feed into the Supervisory Review and Evaluation Process (SREP). ECB supervisors may use the findings when assessing capital adequacy, risk management practices and operational resilience at individual institutions.