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25 March, 2023
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Fresh total lockdown out of the question for Cyprus govt

Finance minister Constantinos Petrides said a second total lockdown would be a 'financial disaster', and revealed that Cyprus won't be pursuing a new 'golden passports' scheme


Finance minister Constantinos Petrides on Monday strongly refuted the possibility of Cyprus entering a second lockdown, such as the one it was plummeted into in March as a result of the outbreak of coronavirus.

Addressing the parliamentary finance committee to which he presented the 2021 budget, Petrides said the decision for a fresh total lockdown is one that rests with the political leadership, but stressed that the government is not planning to move into that direction.

“Such a decision would be a financial disaster,” Petrides said, noting however that the current state of the local pandemic necessitates strict measures.

The finance ministry has, however, made calculations for every scenario, Petrides said, noting that if the epidemiological situation deteriorates further and a lockdown becomes necessary, a month of total lockdown would bring a 1.5-2% decrease in GDP.

Cyprus not pursuing new citizenship-by-investment scheme

Responding to a question posed by an MP of the parliamentary finance committee, Petrides said Cyprus won’t be drawing up a new scheme that would grant citizenship to foreign investors.

Petrides said the European Commission has been clear regarding its opposition to such schemes, and that Cyprus is in constant contact with the Commission, which last week launched infringement procedures against Malta and Cyprus.

The 2021 ‘emergency budget’

"The goal is to quickly return to the production of primary surpluses and to reduce public debt," Petridis said, presenting the 2021 state budget, which he said is different from those that came before it as a result of the coronavirus pandemic.

"I have characterized it as an emergency budget", Petrides said, noting that the the main goal is to address the consequences of the crisis in the best possible way, but also to lay the foundations for a production of primary surpluses.

According to the finance ministry, there are four main fiscal risks regarding the 2021 budget. The first is the outbreak of the coronavirus pandemic in Cyprus, leading to a deterioration in economic activity. Second are the challenges facing the banking sector due to the very high percentage of non-performing loans despite the significant reduction that has been achieved in recent years. Third, challenges and excessive costs that may arise from the improper operation of the general health system (Gesy), but also from an increased flow of migrants. Fourth, the reaching of an insufficient trade agreement between the United Kingdom and the EU.

Increased by €609 million

The state budget for 2021 envisages revenues of €8,861,318,757 and primary expenses (excluding loan repayments and interest expenses) of €7,609,847,339, with the primary balance amounting to €1,251,471,418.

Among others, in the three years 2021-2023, €4.65 billion is expected to be spent on social benefits, €1.01 billion on construction projects, €643.6 million on co-financed projects, €485.5 million on green development, €300 million on a development and resilience plan, and €142.1 million on digitization projects.

Petrides said the budget for 2021 will see an increase of €609 million or 8.7% compared to last year’s budget, mainly due to the bolstering of its social dimension, and the inclusion of emergency parameters to support vulnerable groups, workers, and businesses, but also in light of a strengthened development dimension.

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