Focus on growth, employment control, and surplus in the 2024 budget

The 2024 state budget to be tabled to the Council of Ministers for approval next week will have three key characteristics, Minister of Finance Makis Keravnos told CNA.

Amid the global economic slowdown, driven by rising interest rates and continued uncertainty, Kervanos stressed that the next year’s budget will be significantly developmental, aiming to secure sustainable growth, will aim at containing employment and the wage bill in the public sector and will be in surplus, safeguarding compliance with Cyprus’ EU obligations.

Keravnos said the characteristics of the budget “is that it will be significantly developmental, promoting projects incorporated in the national Recovery and Resilience Plan, will contain the public wage bill and employment which have risen to a relatively excessive level, and will be in surplus so that it would safeguard the economy’s sustainable growth and our compliance with EU obligations.”

With regard to FinMin’s revised macroeconomic projections, Keravnos said that the projection for the 2023 growth has been revised slightly downwards to 2.6% of GDP from the previous 2.8%, whereas in 2024 growth will accelerate to around 2.9%.

However, Kervanos expressed hope that no unforeseen events or exogenous factors will materialize.

“The extent of uncertainty is high both on a global and European level,” he said noting that the EU economy is slipping towards a recession.

But the Minister stressed that the effort through the budget “is to respond to this uncertainty and the existing challenges so as to secure continued growth.”

He also said that Cyprus' application for the second and third disbursement of its Recovery and Resilience Plan is expected to be submitted by end-2023.

“My message is for everyone to operate productively, to increase productivity and efficiency so that we will have good and significant results, safeguarding the course of the economy on the rails that would not lead to troubles,” the FinMin concluded.

Following a 5.6% growth in 2022, the Cypriot economy has decelerated to 2.75 on seasonally adjusted terms in the first half of this year, mainly driven by rising interest rates and the effects of Western sanctions against Russia, following Moscow’s invasion of Ukraine last year.