Sustainable growth comprises the frontline of our policies, FinMin says

The frontline of economic and social policies, in a difficult economic environment such as the current one, is to shield the economy through very careful handling, but also to safeguard the sustainable growth perspective with a focus on people, said Finance Minister Makis Keravnos.

He was speaking at the Economy Forum organised by AKEL in Nicosia. Kyriacos Kakouris, Vice-President of the European Investment Bank (EIB), also addressed the event, saying, among other things, that Cyprus has benefited more than any other EIB shareholder.

In his speech, Keravnos said that the main tool for the implementation of the Government's programme is the National Recovery and Resilience Plan and added that "with the initiatives it contains, we are aiming at important structural reforms and the expansion of the productive base of the economy, utilising research, innovation, technology and, above all, our country's remarkable human resources, which I believe is our most important advantage".

Referring to the draft budget for 2024, which has recently been submitted to the Parliament, Keravnos said it is a growth-oriented budget with a 12% increase in development expenditure, and a people-oriented one with a 15% increase in social benefits, while it also records a surplus of 2.2% of GDP and a primary surplus of 3.6% of GDP.

He added that the growth rate of the economy is projected to be around 2.9% in 2024, compared to the revised forecast of 2.4% in 2023, and at 3.1% and 3.2% in 2025 and 2026 respectively, adding that these projected growth rates are well above the EU average.

He also said that inflation is projected to be contained in 2024 at 2.5% and to follow a downward path and that "the fiscal surpluses expected to be achieved in the coming years will lead to a further reduction in public debt as a percentage of GDP."

The Minister of Finance then also referred to the new government support package, which he said includes a mix of horizontal and targeted measures, totaling €325 million, for the period 2023-2026.

Keravnos also said that the recent double upgrade of the Cypriot economy by Moody's is a vote of confidence and "makes our economy more attractive to investment while reducing potential borrowing costs and promoting quality employment."

Moreover, in his speech, European Investment Bank Vice-President Kyriacos Kakouris said that Cyprus has benefited more than any other EIB shareholder, given the bank's annual lending activity, estimated at €250 million, and its exposure, which amounts to 14% of annual GDP.

He added that the cumulative amount of loans signed by the EIB (since 1981) amounts to €5 billion, adding that almost 50% of these loans were signed after the 2013 financial crisis.

Kakouris also said that investments must meet the national target set by Cyprus by 2030 on energy efficiency and renewable energy, adding that "this target is estimated at €12.9 million for the transport sector and €816 million for all other sectors."

The EIB Vice-President said that Cyprus will receive grants and loans from the Recovery and Resilience Fund amounting to €1.1 billion (or 4% of GDP in 2022) in the period 2021-2026 and added that last year the bank launched the Cyprus Entrepreneurship Fund II, a risk-sharing instrument aimed at providing support to local SMEs and mid-cap companies during this difficult period.

(Source: CNA)