Finance Minister Makis Keravnos on Monday outlined the government’s plans for next year’s state budget to a meeting of the House finance committee.

According to business news website Stockwatch, he told the committee that the government’s priorities are “maintaining a budget surplus, reducing public debt, promoting the green transition and the digital transformation, and maintaining employment in the public sector”.

He also spoke of a need to “maintain a robust financial system”, before saying that the Cypriot economy’s medium-term prospects, up to and including 2028, “remain positive based on the basic macroeconomic scenario”, but with “a certain degree of uncertainty”.

This uncertainty, he said, includes the ongoing war between Russia and Ukraine, and the conflict in the Middle East.

Despite this, however, he stressed that the Cypriot economy’s growth accelerated last year to 3.4 per cent, compared to 2.8 per cent in 2023.

He said that this figure is expected to slightly slow to 3.2 per cent this year, but that it will “continue at high levels” between 2026 and 2028, before specifying that the economy is expected to grow by 3.1 per cent in 2026, three per cent in 2027, and 2.9 per cent in 2028.

He then moved on to the matter of inflation, saying that the rate of inflation in Cyprus is expected to rise from a forecast of 0.7 per cent in 2025 to 2.1 per cent in 2026, before reaching 2.5 per cent in 2027, and then falling back to two per cent in 2028.

Of the island’s unemployment rate, he said it is forecast to remain at its current level of 4.6 per cent through next year, before falling between 2026 and 2028.

On this matter, he said there has been “a continuous improvement in the labour market since 2013”, notwithstanding an “interruption during the pandemic period”.

Then, he spoke about the matter of public debt, saying that it is expected to amount to 7.7 of the island’s gross domestic product by the end of the year, and that it is expected to continue on a “steady downward trend” in the medium term.

In total, the state budget for next year amounts to €10.7 billion, with a total revenue of €12.68bn.

Expenses are expected to rise to €13.72bn when loan repayments and interest are accounted for.

More to follow…