The final discussion on the 2025 state budget is expected to take place in mid-September during a Cabinet meeting, according to Finance Minister Makis Keravnos.
Speaking to the Cyprus News Agency (CNA), Keravnos said that the Finance Ministry has completed the preliminary work, including the allocation of expenses for each ministry.
He also said that the final touches will be added to the state budget document upon his return next week.
Regarding the government’s investment plan, the Finance Minister confirmed that the implementation of the development programme aimed at strengthening Cyprus’ economic model will continue.
This, he continued, will involve fostering collaborations between Cypriot businesses, both among themselves, as well as in terms of them working with foreign companies.
“We are working on this, and we believe it can improve the current account balance, particularly through initiatives with an export orientation,” Keravnos stated.
He also mentioned that efforts will continue to enhance the existing economic model in areas with comparative advantages, such as tourism and attracting foreign companies, while also exploring new sectors.
In the short term, Keravnos explained, the goal is to achieve a full implementation of the Recovery and Resilience Plan.
He pointed out that the ministry is preparing to submit the fifth and sixth instalments, with significant funds expected to be received by the end of the year.
It should be noted that, following the required inspections by EU institutions on the payment requests for the second and third instalments submitted on December 15, 2023, and the fourth instalment submitted on July 3, an amount of €229 million is expected to be received.
The Finance Minister also mentioned that the ministry will continue working on restructuring the public service and rationalising the state payroll, based on a study by the International Monetary Fund (IMF).
In addition, Keravnos said that a request for technical assistance has been sent to the European Commission, as the IMF study is more general.
“We want to delve into the details,” the minister said.
“This is an issue that will require time, as our goal is to curb the rate of payroll growth,” he added.
Commenting on the recent data concerning Cyprus’ growth rate in the second quarter, Keravnos welcomed the acceleration of economic growth.
“We are doing everything possible to maintain the upward trend amid a volatile international economic environment,” he said.
Following the preliminary estimate by the Statistical Service, which indicated a growth rate of 3.7 per cent in real GDP (seasonally adjusted figures) for the second quarter, up from 3.3 per cent in the first quarter, the Finance Ministry announced it would revise its initial estimate for the entire year 2024, which was 2.9 per cent.
Moreover, according to the projections in the strategic fiscal policy framework for 2025-2028, Cyprus’ GDP growth rate for 2025 is expected to reach 3.1 per cent.
However, the University of Cyprus’ Economics Research Centre (CypERC) has been somewhat more optimistic, with an expected GDP growth of 3.3 per cent.
Furthermore, the primary surplus, which excludes debt servicing costs, is expected to reach €1.42 billion, equivalent to 4.3 per cent of GDP.
Finally, the state’s fiscal balance is expected to reach a surplus of €936 million, equivalent to 2.8 per cent of GDP.
