Cyprus has the slowest courts in the European Union and spends less per person on them than any other member state, the Fiscal Council said in its 2026 interim report, published on Thursday.
The Council warned that 18.5 billion euros in residual private debt would remain a permanent drag on growth unless the justice system is sped up immediately and the Commercial Court is fully up and running. The Commercial Court was set up to hear high-value commercial disputes quickly with specialised judges, but it is not yet operating.
Banks cut their non-performing loan ratio to a historic low of 1.6 per cent in April 2026, from 5.5 per cent in 2021. But the 18.5 billion euros, which is more than half of 2025 GDP, is now held outside the banking system by credit acquiring companies.
Court delays
The report said a lack of resources and staff had completely reversed efforts to improve the courts. The time taken to resolve a first-instance case fell steadily from 903 days in 2014 to 605 days in 2023, before jumping to 709 days in 2024. The 104-day rise in a single year made Cyprus the worst performer in the EU. The deterioration coincided with a 2023 reform.
In civil and commercial cases, which include enforcement of collateral and foreclosures, first-instance proceedings reach 682 days. That is the second-worst figure in the EU after Greece, compared with 19 days in Denmark and 31 in Estonia. Appeals take longer in Cyprus than anywhere else in the bloc.
The foreclosure framework is mainly out of court, but borrowers who challenge foreclosures in court push a significant share of cases into the judicial system, the Council said. As a result, any contested enforcement of collateral drags on for more than three years, wiping out the present value of any recovery.
Funding
The report said court performance could not be separated from the resources available. Public spending on the courts came to 50.2 million euros in 2024, or 0.14 per cent of GDP. That is the second-lowest ratio in the EU, against a median of 0.295 per cent. Per person, spending stood at 51.9 euros, the lowest of the 27 member states.
The Council said targets to cut hearing times that are not backed by more staff, infrastructure and modern technology carry a heightened risk of not being met. It rated the risk from the unresolved debt as of medium likelihood and medium impact, with a clear medium-term horizon.
