The picture of public finances is very satisfactory, Fiscal Council Chairman Michalis Persianis has told the House Finance Committee.
He was speaking on Monday, 13 October, at the start of the discussion on the 2026 state budget.
However, he warned of external risks and potential expenditure that may cause uncertainty and could derail public finances.
“The Fiscal Council’s comment, within the context of validating the assumptions of the budget, was that it is moving in a very good direction. The fiscal indicators are extremely satisfactory. We congratulate the Ministry of Finance on a number of issues, the first of which is, of course, achieving the target of 60% for the level of public debt,” Persianis told MPs.
He spoke, however, of a “lot of risks” and many issues that remain uncertain, as well as many variables that could easily change. There are “external risks and potential expenditure that are both numerous and costly. These could alter the data over the course of the Medium-Term Fiscal Framework,” he said, adding that inflexible expenditure continues to absorb a significant share of total spending, a fact that traps each government in a “procyclical policy,” which “will be very dangerous if the economic climate reverses, something that will inevitably happen at some point,” he said.
Persianis also noted that, based on the Republic’s obligations under the EU’s economic governance rules, “we are in expenditure excess,” referring to “a very high risk in the calculations to correct this trajectory.” He estimated, however, that as long as the debt remains below 60%, this excess will not easily lead to measures being taken against Cyprus. He also added that the plan to correct this excess is better than last year’s, though it still carries a high implementation risk.
He further stated that this year’s Medium-Term Fiscal Framework is moving along a “more realistic trajectory.”
(Source: CNA)
