IMF calls for judicial and bureaucratic reform to sustain growth in Cyprus

By Dr Νicolas Kyriakides, Assistant Professor, Director of the Procedural Law Unit, University of Nicosia, President of the Reform Committee of the Cyprus Bar Association

In its latest Article IV Consultation report on Cyprus, released on 13 May 2025, the International Monetary Fund (IMF) praised the country’s solid economic performance but strongly emphasised the urgent need to improve the efficiency of its judicial system and to reduce bureaucratic obstacles that hinder investment and economic activity.

The IMF notes that while Cyprus recorded real GDP growth of 2.5 per cent in 2024—driven by tourism, construction, and professional services—the long-term sustainability of this growth depends on the timely implementation of structural reforms. Chief among these, according to the report, is the reform of the civil justice system, which is currently seen as slow and complex, undermining the country’s attractiveness to investors and businesses.

Delays in civil proceedings, limited digitalisation of court processes, and inefficient case management are contributing to a backlog of cases and eroding public confidence in legal institutions. The IMF urges Cypriot authorities to continue efforts to enhance the functioning of the judiciary, including through better administrative practices, increased use of technology, and capacity-building across the system.

In parallel, the IMF highlights bureaucratic inefficiencies as a key bottleneck to business development. Lengthy permitting processes, cumbersome regulations, and fragmented public service delivery are identified as areas in need of simplification. The Fund recommends accelerating the digital transformation of public administration and improving inter-agency coordination to make regulatory processes more transparent and predictable.

These reforms are seen as essential not only to foster investment but also to increase productivity and support inclusive growth. According to the IMF, improving judicial efficiency and reducing administrative burdens will be critical to unlocking the full potential of Cyprus’ economy, enhancing investor confidence, and ensuring that growth is both resilient and broad-based.

While the report also acknowledges Cyprus’ fiscal discipline, financial sector resilience, and easing inflation, it warns that without addressing deep-rooted institutional inefficiencies, the country may struggle to maintain its current growth trajectory in the face of global and regional challenges