The Cyprus Ministry of Finance’s Debt Management Office (“DPMO”) issued a Sustainable Finance Framework (“Framework”) in January 2023 in light of its long-anticipated sustainable bond issuance.

The PDMO stated that the publication of the Framework signifies an important step for Cyprus to align its national climate change strategy with its international debt financing strategy. It should be noted that the Framework is in line with the Green Bond Principles, Social Bond Principles, the Sustainability Bond Guidelines, the Green Loan Principles and the Social Loan Principles. The PDMO stated that green/sustainable bonds are a significant financing tool boosting the opportunity to attract international investors. Consequently, that expands the financing options and increase the interest in international capital markets over Cyprus’s issuances.

The framework sets out detailed requirements regarding the use of proceeds, the process for project evaluation and selection, the management of proceeds as well as reporting.

Use of Proceeds

Proceeds from the issuance of the green/sustainable bonds will be applies exclusively for financing or refinancing of expenditures that meet the criteria set out in the Framework. These eligibility criteria include measures related to electric vehicles, enlarging and improving bicycle infrastructure and related R&D activities.

Process for Project Evaluation and Selection

The stages involved in the project evaluation and selection include project nomination, initial screening, detailed review, eligibility decision, review of expenditures, replacements, framework update and reporting.

Management of Proceeds

The Republic of Cyprus may use proceeds from the issuance of any Sustainable Instruments issued under the Framework for general budgetary purposes or such other use as may be specified in the applicable offering document for such issuance. The net proceeds of any sustainable instrument will be applied towards eligible expenditures as per the relevant eligibility criteria. The Republic will endeavour to fully match the net proceeds from any sustainable instrument issuance to eligible expenditures within two budget years from the date that the relevant sustainable instrument has been issued.  In the event that amounts raised from sustainable instruments are not immediately and fully allocated to eligible expenditures, the PDMO will manage unallocated proceeds in line with its normal cash management guidelines and will ensure that its cash accounts maintain a balance that is no less than the amounts unallocated under any sustainable instrument issuances outstanding.


The Republic of Cyprus is committed to reporting on any sustainable instrument issuance under this Framework in line with best market practice, including both allocation and impact reporting annually until such time as the net proceeds from each sustainable instrument issued have been fully allocated against eligible expenditures.

Secondary Party Opinion

We note that the PDMO has published a Secondary Party opinion issued by ISS Corporate Solutions Inc., which affirms that Cyprus’s Framework is consistent with the aforementioned principles and guidelines.

Review and Update

Lastly, it is noted that the PDMO has stated that any new rules, regulations and publications regarding the ESG considerations, practices and reporting process, will be regularly reviewed and the Framework will accordingly be updated and amended.


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