Cyprus economy exceeding expectations, says Finance Minister

The Cypriot economy is on an upward trajectory and displaying resilience, Finance Minister Makis Keravnos said on Friday, after briefing the Cabinet on the semi-annual fiscal policy report.

In remarks following the cabinet meeting, Keravnos explained that the purpose of the briefing and report was to assess whether the financial indicators are in line with projections, noting that corrective measures are taken in the event of negative forecasts and deviations.

“In our case, the semi-annual report indicates that there are positive deviations,” the minister said.

“The report aligns with and even exceeds our forecasts, which means our economy is progressing on a positive trajectory and demonstrating resilience,” he added.

The minister highlighted that by the end of June, the fiscal balance—also known as the budget balance—stood at 1.3 per cent of GDP.

This figure represents the difference between the government’s total revenues, primarily from taxes, and its total expenditures over a specific period.

Additionally, the primary balance, a key economic indicator that excludes interest payments on existing debt, was at 2 per cent of GDP.

This measure reflects the government’s ability to manage its current fiscal policy without the burden of past debt, indicating a strong fiscal position.

According to a report released on Friday, Cyprus has reduced its debt-to-GDP ratio to 72.3 per cent by June 2024, a significant decrease from 82.1 per cent the previous year.

This improvement was driven by the repayment of €850 million in debt, GDP growth of 3.5 per cent in the first half of the year, and a new €1 billion bond issuance.

Moreover, the total general government debt fell to €22.81 billion from €23.04 billion in March.

The Finance Ministry now expects the debt-to-GDP ratio to drop below the Maastricht Treaty’s 60 per cent threshold by 2026.