Financial policy’s main targets achieved, Finance Minister says

The government’s main financial policy targets have been achieved, Minster of Finance Makis Keravnos has said, stressing that the Cypriot economy is on a healthy course despite significant challenges and uncertainty, marking the economic outlook.

On 29 April taking stock of one year in office, Keravnos said the Finance Ministry “feels it has achieved all targets set and we feel there have been achievements in a short time.”

“We are continuing efforts for a financial policy, which would target on a fairer distribution of income and the produced wealth,” he told a press conference, adding his personal responsibility “is to maintain sound public finances and to safeguard macroeconomic and financial stability through a rational administration of resources for the improvement of every citizen’s standard of living.”

He added that the Ministry continues to monitor the challenges and developments and adopts the appropriate measures in the context of a human-centred financial policy within our capabilities.

"Because memories are fresh on what could happen if the basic parametres are breached," he added.

Keravnos said that the Cypriot economy is depicted both by the European Commission and the International Monetary Fund as one of the best in the EU with the GDP growth rate expected to accelerate from 2.5% in 2023 to 2.9% this year “which constitutes on the best growth rates in the EU.”

He also recalled in the decline of inflation to 3.9% in 2023 and the estimated drop to 2.4% this year, whereas the unemployment rate from 6.1% in 2023 will decline 5.4% The Finance Minister also recalled the steep reduction of the public debt-to-GDP ratio to 70.6% this year.

On Cyprus’ large current account deficit which amounted to 12.1% in 2023, Keravnos said the deficit will improve to 11.9% this year and added that a team of FinMin officials has been set up with a view to enrich our economic model in way that would tackle any problems in the current account deficit.”

The aim is to encourage exports and the export efforts, he added.

Moreover, Keravnos highlighted that Cyprus ranks 9th among the EU 27 member-states with the highest minimum wage of €1,000 with average monthly earnings of Cypriots at €2,248 (2022), whereas median earnings compared favourably with the majority of EU member-states.

“This does not make us complacent, we have not solved all of our problems, on the contrary we recognise the challenges, the continuation of price hikes, the great challenges created by constant conflicts in our region and the Finance Ministry is working on a continuous basis to tackle these difficulties and to support the middle class, the corporations and to have in place a safety net for the vulnerable,” he stressed.

The government, he added, has adopted three sets of measures of state support to households and businesses from the price hikes totalling €291 million.

He recalled that upon assuming office the government had to tackle challenges stemming from the Russian invasion of Ukraine and the ensuing spike in energy prices and inflation whereas he also recalled the approval of the framework to tackle non-performing loans.

The Finance Minister also recalled the resolution of the “threat” by the European Commission over the violation of the EU law concerning the 5% VAT rate for the purchase of primary residence to investors, as well as the creation of the Equity Fund enabling improved access to finance for businesses and the setup of a National Development Organisation.

He also recalled the continued work on the tax reform, to be presented in the first half of 2025 and the green taxation aiming to expedite green transition and vowed that “any state income will be returned back to households and businesses.”

(Source: CNA)