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The Council of Ministers is set to finalize discussions on the 2025 state budget by mid-September, as confirmed by Finance Minister Makis Keravnos. The Ministry of Finance has completed preparations, including setting expenditure limits for all ministries. Final touches on the budget will be made once Keravnos returns from his summer break.
A key focus of the budget is the continuation of the government’s growth program, aimed at enhancing Cyprus’ economic model. This will involve promoting collaborations between Cypriot and foreign companies, particularly in export-oriented initiatives, to improve the current account balance. The government is committed to strengthening sectors where Cyprus has comparative advantages, such as tourism while exploring new areas for growth.
Keravnos also emphasized the importance of fully implementing the EU-funded €1.2 billion Recovery and Resilience Plan. The Ministry is preparing to request the 5th and 6th tranches of this funding, with significant disbursements expected by the end of the year. Following EU reviews, Cyprus is set to receive €229 million from earlier tranches.
In addition to the budget and growth initiatives, the Ministry is focused on restructuring the public service and rationalizing the state wage bill. This effort is based on a study by the International Monetary Fund (IMF), with further detailed analysis being sought from the European Commission. The goal is to manage the growth rate of the wage bill effectively.
Keravnos welcomed recent data showing a 3.7% growth in Cyprus’ GDP for the second quarter of this year, indicating a stronger-than-expected economic performance. As a result, the Finance Ministry is revising its 2024 growth forecast upwards from 2.9% to 3.1%. The 2025 budget projects a primary surplus of €1.42 billion, or 4.3% of GDP, with an overall fiscal surplus of €936 million, or 2.8% of GDP.
Source: CNA
