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Republic of Cyprus
Appraisal of Public Investment Projects

The Fiscal Responsibility and Budget Systems Law (FRBSL) provides, inter alia, for the selection process for the inclusion of projects in the budget and for their implementation and monitoring, through the standardization of their appraisal using common methodology and parameters, with the aim to promoting those projects that are considered to be viable and beneficial in the long run. More specifically, Part ΧΙ of the Law (articles 82-88) provides for the following:

• Pre-selection of projects on the basis of the submission of a project concept note by economic entities containing basic project information. The project concept note will include, amongst others, a description of the project’s objectives, activities and expected outputs, its consistency with the Government’s development strategy and an estimation of its total revenues and costs.
• Project Appraisal, for financially significant projects (with a cost equal to or more than €5 m.) which have been successful at the pre-selection stage, through the undertaking of a feasibility study that includes a social and environmental impact analysis. The results of this appraisal will be recorded in the project appraisal report.
• Selection of projects on the basis of the outcome of their appraisal in relation to their economic viability and affordability.
• Selection of Procurement method. When a project is proposed to be implemented as a Public Private Partnership, an additional appraisal on the basis of both qualitative and quantitative parameters will be required.
• Regulatory framework for the implementation of projects including the Public Procurement legislation.
• Project monitoring procedures and procedures for the amendment of contracts.
Article 89 of the Law provides for the issuance of Guidelines by the Minister of Finance that will set the process, the methodologies, criteria and other requirements for the implementation of the provisions of articles 82-88 of the FRBSL.


Guidelines which cover the first two stages of the Public Investment Management process, that is, the stages of project pre-selection and project appraisal have already been prepared by Directorate General of European Programmes, Coordination and Development (DG EPCD) and approved by the Council of Ministers in July 2015. The Guidelines include a description of the process of pre-selection and appraisal of projects and determine the roles and competencies of all bodies involved in the first two stages of the Public Investment Management process.


According to the FRBSL and the Guidelines, economic entities (ministries) will be responsible for the undertaking of Project Concept Notes at the stage of pre-selection of projects, and the project appraisal reports and the feasibility studies for pre-selected projects, at the stage of project appraisal, while the final decisions both with regard to the pre-selection of projects in order to move forward to the detailed appraisal stage, as well as for their inclusion in the Budget will be undertaken by the Council of Ministers. The central economic services have an important role to play in safeguarding the process and the quality of the appraisals: (a) DG EPCD will act as an independent reviewer of the economic entities’ project proposals and appraisals and (b) the Budget Directorate of the Ministry of Finance will evaluate the economic affordability of the projects and their consistency with the Budget preparation rules.


At the same time, the preparation the Methodological Manual has been completed by the World Bank, which covers the stages of project pre-selection and project appraisal and which elaborates on procedures and appraisal methods to be followed and provides templates.


The full implementation of the new project selection process for inclusion in the State Budget is expected to take place in the 2018-2020 budget. Aiming at the smooth transition to the new PIM system, it was decided to implement this new process, on a pilot basis for a limited number of projects per Ministry, during the preparation of the 2017-2019 budget. The pilot implementation of the new process on a limited number of projects will be used as a learning experience aiming at identifying potential problems/shortages to the implementation of the whole process and consequently at the adoption of suitable measures for overcoming these, in time for the full implementation of the process in the 2018-2020 budget.


At the same time, recognizing the need for capacity building at all bodies involved in the new PIM process, a relevant training program is planned to be provided by experts in 2016.


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© 2014 - 2019 Republic of Cyprus,
Directorate General for European Programmes, Coordination and Development