Makis Keravnos draws the line on uncontrolled spending - "Don't exceed the ceilings, or else..."

On behalf of the Minister of Finance, Makis Keravnos, the Ministry’s General Director George Pantelis has sent a strict message to ministries, deputy ministries and independent agencies, instructing them to faithfully observe the expenditure ceilings in view of the state budget for 2025.

More specifically, in his circular he emphasises that "it is very important to rank priorities, in accordance with the objectives of the government policy for the submission of documented proposals and the preparation of an integrated budget and medium-term financial framework for better planning, as well as its wider implementation."

"In the event that proposals are submitted that exceed the ceilings that have been set, the Minister of Finance may return the budget proposal or readjust it, so that it is consistent with the Strategic Fiscal Policy Framework and the budget circular," he warns.

At the same time, Pantelis, on behalf of the Minister of Finance, makes a warm plea to the Ministries/Deputy Ministries and the Independent Services, to during the preparation of the budget for 2025 and the preparation of the Medium-Term Fiscal Framework for the years 2025-2027, "comply with the provisions of the circular and compliance with the expenditure ceilings, as determined by the Council of Ministers, in order to avoid the risk of fiscal derailment".

The uncertain geopolitical environment with which Cyprus adjoins, Panteli points out, "imposes a prudent and responsible fiscal policy, so that the country is and is recognised as a country of stability, progress and development, with the ultimate goal of creating conditions of prosperity and progress in our country".

"I hope for everyone's cooperation, to respect the schedules, in order to complete the necessary process on time and submit the budget to the Parliament on 30 September, as stipulated by the Constitution," he says.

Strategic Fiscal Policy Framework

Also according to the circular from Pantelis, the Council of Ministers, during its session last Wednesday (29 May), approved the Strategic Fiscal Policy Framework for the four-year period 2025-2029, through which the main strategic directions and priorities of the Government's economic policy for the next three years are laid out and which forms the basis for the preparation of the budget for 2025 and the Medium-term Fiscal Framework 2025-2027.

The Strategic Fiscal Policy Framework for the four years 2025-2028, he explains, has been prepared taking into account geopolitical developments and their impact on the global economy.

"The current geopolitical situation has greatly increased economic uncertainty internationally and at the same time led to high inflation, with the consequence, among other things, of the significant rise in interest rates," he adds, noting that "the outcome of geopolitical developments is an important parameter for economic developments in the coming years".

According to Pantelis, the Strategic Fiscal Policy Framework consists of three Statements-Chapters:

Chapter 1 -Government Strategy Statement: Analyses the broader framework of government development policy.

A key economic policy priority in the short term is to limit the economic impact of Russia's invasion of Ukraine, particularly in terms of significant price increases, as well as sectoral impacts, such as in the tourism sector.

At the same time, his economic policy focuses on the implementation of structural reforms in various sectors of the economy.

Chapter 2- Statement of Fiscal Strategy: Presents the recent macroeconomic and fiscal developments, as well as the macroeconomic forecasts with the ultimate goal of setting the spending ceilings for the Constitutional/Independent Services and for each ministry/deputy ministry, based on which the budget will be prepared of the state for 2025 and the Medium-term Financial Framework 2025-2027.

The objective of the fiscal strategy is to support the vulnerable groups of the population most affected by the effects of Russia's invasion of Ukraine and the war in the Middle East, while ensuring the sustainability of public finances, the achievement of policy priorities according to the Government Strategy Statement and improving the quality of public finances, through the redistribution of public expenditure to sectors with high added value.

Chapter 3 - Employment Policy Statement: Describes the policies for the effective use of human resources, the improvement of the productivity of the public service, with the use of modern technology, the reduction of bureaucracy and the administrative burden, which are the main priorities of the Government for the human resources management.

Forecasts for income and expenses

According to Pantelis, based on the Ministry of Finance’s forecasts, the revenues of the central government in the next four years are expected to increase and reach €9.477 billion in 2025, €9.832 billion in 2026, €10.185 billion in 2027 and €10.551 billion in 2028.

Taking into account the estimates of the Ministry of Finance for the revenues, as well as the fiscal targets, the total upper limit of expenses, including the Parliament which prepares a separate budget, for the central government is set at €10.114 billion, €10.271 billion, €10.016 billion and €10.517 billion for the years 2025-2028.

Based on the new economic policy framework, he continues, the expenditure ceilings approved by the Council of Ministers, within the framework of the Strategic Framework of Fiscal Policy 2025-2028, concern the four years 2025-2028.

It is pointed out that the expenditure ceilings for 2028 are indicative and have been calculated on the basis of the corresponding ceilings of 2027, including an increase of 5%, while the budget at this stage remains on a three-year basis (Medium-term Fiscal Framework 2025-2027).

It is also noted that the budget of each Ministry/Deputy Ministry and Independent Authority should be submitted to the Ministry of Finance, together with the necessary supporting documents, by 26 June at the latest.

(Source: InBusinessNews)