The 2026 state budget of € 10.7 billion and the and the Medium-Term Fiscal Framework (MTFF) 2026-2028 has been approved by the Council of Ministers and will be submitted to parliament on October 2, Finance Minister Makis Keravnos said on Monday.

“It is a balanced, growth-oriented budget, with a significant emphasis on social cohesion and social policy,” Keravnos said.

Outlining the main objectives of both the 2026 budget and the MTFF 2026-2028, the Minister said they included the maintaining of a fiscal surplus, the containment of public sector employment growth, a reduction of public debt and measures to support the green transition.

Keravnos emphasised that the government was planning to create conditions that would encourage sustainable growth in key sectors of the economy while safeguarding the stability of the financial system.

He also underscored the strategic importance of infrastructure projects that would generate significant added value, particularly those co-financed through EU mechanisms and aligned with the Recovery and Resilience Plan.

According to the 2026 budget projections, development expenditure expected to increase by 4.7 per cent compared to 2025, while social benefits are expected to rise by 6.7 per cent, including spendings on education, health and social welfare.

Additionally, for the first time, a dedicated €26 million of the 2026 budget will be allocated for persons with disabilities.

Keravnos added that, despite a degree of uncertainty due to adverse geopolitical developments, the medium-term prospects of the Cypriot economy remained positive.

“The growth rate is expected to fluctuate around 3.1 per cent in 2026 and the unemployment rate is expected to fluctuate at 4.6 per cent of the labour force, with a downward trend,” he said.

President Nikos Christodoulides, speaking before the Council of Ministers to ratify the state’s draft balance sheet earlier in the said that the 2026 budget aimed to safeguard economic stability while giving back to the community.

“A robust growth-based economy is one of our top priorities,” the President said.

He described the balance sheet as a “surplus budget, a budget of stability, prospects, with a heavy social and developmental slant”.

Christodoulides asserted that public debt continues on a downward trajectory.

“When we took office in 2023, the public debt was at 73.6 per cent [of GDP], in 2026 we will go to 52.9 per cent, one of the lowest in the eurozone…”

The government forecasts GDP growth of 3.1 per cent for next year, while the unemployment rate is projected to drop to 4.6 per cent.

“If we compare with what is happening in powerful states of the eurozone, and also consider that we are in the midst of two armed conflicts, these numbers are indicative of the responsible economic policy we are pursuing,” the president said.

“When it comes to the economy, we can neither experiment nor tinker around. We are accountable only to the Cypriot people.”