Cabinet approves budget, spending at €10.13 billion, says Finance Minister

The Cabinet has approved the budget for the year 2025 and the Medium-Term Fiscal Framework 2025-2027, Finance Minister Makis Keravnos said in a statement after the Cabinet meeting chaired by President Nikos Christodoulides.

Speaking on 20 September, he said that the budget's expenditure for 2025 amounts to €10.13 billion, €10.33 billion for 2026 and €10.1 billion for 2027. He added that the fiscal balance will be in surplus and is expected to reach 3.3% as a percentage of GDP, while the primary fiscal balance is expected to reach 4.8% of GDP.

According to the Finance Minister, the 2025 budget and the 2025-2027 fiscal framework were prepared on the basis of the European Commission's new rules on economic governance, where the European Commission sets for each member state the rate of expenditure growth it can implement, adding that for Cyprus the expenditure growth rate was set at 4.9% on average for the three-year period.

He added that there are several development projects and key infrastructure projects which are ongoing and the bulk of which are included in the recovery and resilience plan, which is due to be completed in 2026.

On the public debt, he said that based on the budget and the 2025-2027 fiscal framework, it is estimated to be reduced to 64.2% in 2025, 58% in 2026 and 53.5% in 2027.

On the unemployment rate, the Minister said it is estimated to reach 4.8% and will follow a downward trend, which he said essentially corresponds to a full employment situation, adding that the government will examine the labour needs and is taking various steps to this end, including inter-state agreements.

Asked whether a provision was included in the budget for the first €25 million for the GSI electricity interconnection, he replied that this amount was included in the 2025 budget.

Asked if specific areas from which potential risks could arise have been identified, Keravnos said that there is potentially a risk regarding the natural gas terminal in Vasiliko, adding that following the handling and contacts made with both participating banks and the European Commission, there is now a positive climate.

He added that with the planning of the project in Vasiliko that is being prepared by the Ministry of Commerce and ETYFA, the project will be ready to start in the very near future as the two banks will continue to finance the project and will be transferred to the new effort to complete the project without consequences.

Furthermore, the Ministry of Finance noted in a statement that development spending is expected to increase by 2.1% in 2025 compared to 2024, while in 2025 a 5.2% increase is expected in spending on education, health and social benefits.

It is added that according to the baseline macroeconomic scenario, the outlook for the Cypriot economy in the medium term remains positive but with a significant degree of uncertainty, while after accelerating in 2024, due to a better performance of exports and private consumption, growth is projected to around 3.1% in 2025.

(Source: CNA)