The European Commission proposed on Wednesday adjustments to its proposal for the EU budget, including an additional €200 million for Cyprus, of which €100 million in 2014.

EU budget Commissioner Janusz Lewandowski said he is “glad to express Europe’s solidarity with Cyprus to mitigate the impact of its painful adjustment through investing EUR 200 million more in its economy”.

The additional EU funds will help Cyprus invest in energy efficiency, support small and medium-sized enterprises and create or maintain jobs that otherwise could be lost.

Financing will be provided through the Structural Funds and the Flexibility Instrument which enables extra funding in clearly identified cases.

The changes largely reflect the political agreement reached on the Multiannual Financial Framework 2014-2020 between the leaders of the European Parliament, the Council and the Commission at the end of June.

In an effort to urgently tackle youth unemployment and strengthen research, funding possibilities in 2014 will be increased by €130 million for Erasmus+ (EU`s new programme for education, training and youth), by €30 million for COSME (a new programme promoting entrepreneurship, in particular for small and medium enterprises) and by €200 million for Horizon 2020 (the new programme for research and innovation).

The proposal also covers human and financial resources needed for the creation of a new generation of joint technology initiatives (public-private and/or public-public partnerships) which aim at for example providing new and more effective diagnostics and treatments, developing new and competitive bio-based value chains or developing clean energy solutions. These initiatives will be funded from the new Horizon 2020 programme.

Excluded from international markets since April 2011, Cyprus applied for financial assistance from the EU bailout mechanism in June 2012, after its two largest banks sought state aid following massive write-downs of Greek bond holdings amounting to €4.5 billion.

Cyprus and its international lenders (EC, ECB, IMF) agreed in late March on a €10 billion bailout programme, which provided for a haircut on uninsured deposits in the island’s two largest banks. Under the agreement, Laiki, Cyprus’ second largest lender would be wound down and BoC, the island’s largest lender, will absorb its good part. This process is already well underway.

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