Keravnos: The state budget will be presented to the Cabinet in mid-September

Council of Ministers’ final debate on the 2025 state budget is expected to take place around mid-September, Finance Minister Makis Keravnos has revealed.

Speaking to CNA. Keravnos said that all the preparatory work has been done at the Ministry, and the allocations of expenses per Ministry have been made, and adding that upon his return next week, the final touches will be put into the text of the state budget.

With reference to the Government's investment plan, the Minister of Finance said that the implementation of the development programme will continue to strengthen the economic model, by promoting cooperation between Cypriot businesses both among themselves and with foreign companies.

"It is something we are working on and we believe that this can also improve the current account balance, through mainly export-oriented initiatives," said Keravnos, adding that at the same time the existing model will continue to be strengthened where and where comparative advantages are recorded, such as tourism and attracting foreign companies, by exploring new areas.

Regarding the short-term plan, Keravnos said that the goal is the full implementation of the Recovery and Resilience Plan, with the Ministry preparing for the submission of the 5th and 6th installments, while, he continued, significant amounts are anticipated to be amassed. It is recalled that with the completion of the required controls by the EU institutions on the application for the payment of the 2nd and 3rd installments, submitted on 15 December, 2023, and the 4th installment (submitted on July 3), €229 million is expected to be collected.

He also noted that the Ministry of Finance will continue work on the issue of restructuring the public service and rationalising the state payroll, based on the study of the International Monetary Fund. At this point, Keravnos said that a request for technical assistance has also been sent from the European Commission, since, as he mentioned, the IMF study is more general.

"And we want to go into detail. This is an issue that will take time, since the goal is to limit the rate of wage growth," he stressed.

Also, when asked to comment on the latest data on the growth rate in the second quarter, Keravnos welcomed the acceleration of the economy's growth, to emphasise that "we are doing everything we can to maintain the upward trend, in the midst of the liquid international economic environment."

It is recalled that after CySTAT’s preliminary estimate for a real GDP growth rate of 3.7% (seasonally adjusted data) in the second quarter, after 3.3% in the first quarter, the Ministry of Finance announced that it will revise upwards its original estimate for all of 2024, which was 2.9%.

Based on the projections in the Strategic Fiscal Policy Framework 2025-2028, the growth rate in 2025 is estimated to reach 3.1%. The primary surplus (i.e. excluding debt service costs) is estimated to reach €1.42 billion, corresponding to 4.3% of GDP, while the fiscal balance is estimated to show a surplus of €936 million, corresponding to 2.8% of GDP.

(Source: CNA)