Cyprus is in line with fiscal recommendations, according to European Semester Autumn Package

Cyprus is one of eight eurozone member states that the European Commission has found to be in line with its fiscal recommendations in their draft budgetary plans for 2025.

The country’s medium-term plan has also been found to meet the requirements of the new economic governance framework along with most EU member states, according to the European Semester Autumn Package.

This is the first European Semester Autumn Package since the reform of the EU's new economic governance framework entered into force in April 2024.

Draft budgetary plans

Regarding the assessment of the draft budgetary plans (DBPs) for 2025 and whether they represent appropriate first steps to implement the respective medium-term plans, the Commission focused on net expenditure growth in 2024-2025, assessing whether net expenditure is within the ceilings set out in the Member States' medium-term plans, provided such a plan is available and considered to be compliant with the new framework.

Eight euro area Member States are considered to be in line with the fiscal recommendations, while seven are not fully in line, one is not in line, and one risks not being in line.

Greece, Cyprus, Latvia, Slovenia, Slovakia, Italy, Croatia, and France are assessed to be in line with the recommendations, as their net expenditure is projected to be within the ceilings.

Estonia, Germany, Finland, and Ireland are assessed to be not fully in line as their annual (Finland, Ireland) and/or cumulative (Estonia, Germany, Ireland) net expenditure is projected to be above the respective ceilings.

Luxembourg, Malta, and Portugal are assessed to be not fully in line with the recommendation: while their net expenditure is projected within the ceilings, they do not phase out the energy emergency support measures by winter 2024-2025, as recommended by the Council.

The Netherlands is assessed to be not in line with the recommendation, as the net expenditure is projected above the ceilings.

Lithuania is assessed to risk being not in line with the recommendation, as the net expenditure is projected to exceed the rates that the Commission would consider as an appropriate first step in the implementation of the new economic governance framework.

Medium-term plans

Concerning medium-term plans, which integrate fiscal, reform, and investment objectives into a single medium-term plan, the Commission has concluded its assessment for 21 out of the 22 submitted plans.

Out of the 21 plans, the Commission assessed that 20 meet the requirements of the new framework and set out a credible fiscal path to ensure that the respective Member States' debt level is put on a sustainable downward path or kept at prudent levels. This concerns the following Member States: Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Ireland, Greece, Italy, Latvia, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden. For these Member States, the Commission recommends that the Council endorse the net expenditure path included in these plans.

In the case of the Netherlands, the Commission has proposed that the Council recommend a net expenditure path consistent with the technical information the Commission transmitted in June. The Commission is still assessing the medium-term plan of Hungary.

For five out of the 20 medium-term plans that have been assessed positively by the Commission, the net expenditure path is based on an extension of the adjustment period from four to seven years. The extension is underpinned by a set of reform and investment commitments included in the plans. In all five cases, the Commission assessed that the measures included in their plans met the criteria to justify an extension. This concerns the medium-term plans of Finland, France, Italy, Spain, and Romania.

(Source: CNA)