Press Releases

The Central Bank of Cyprus and independent national authorities play a crucial role in maintaining economic and financial stability, especially in the face of global inflationary pressures.

In this environment, there is increased pressure on the government and the regulators to take action to mitigate the negative impact on the real economy for both people and businesses.

The weight on the decision-makers is intensified by the complexity of the current inflationary crisis, where the orthodox course of monetary action does not appear to be enough. Thus, the government must carefully weigh its decisions to strike a balance between a responsible fiscal policy, macroeconomic stability and protection of the social fabric.

We always keep the latter in mind when taking action. The President's governance program has an anthropocentric approach, which is applied across all reforms and investments and short-term support measures for vulnerable and middle-class households and SME’s.

The philosophy of the government is well reflected in the 2024 budget, which the Council of Ministers approved last week. Placing people at the centre and promoting a sustainable and resilient economy, modern governance, and environmental protection. The GDP  growth rate in 2024 is estimated at 2,9%. The 2024 budget prioritises strengthening social spending and implementing development projects and reforms outlined in the Recovery and Resilience Plan, while maintaining fiscal discipline. Fiscal surplus for 2024 has been estimated at 2,2% of GDP with a medium term goal of public debt below 60% by the end of 2026.

The responsible approach in preparing the annual budget is also reflected in the very limited number of new positions in the public sector created. Emphasis is now placed on expenditures (increased by 15%), which will enhance overall economic productivity and, as a result, the workers' income. Expenditures to promote the green and digital transition with high added value, such as significant e-governance projects and the penetration of renewable energy sources, are also highlighted and implementation of the Resilinece and Recovery Plan.

Allow me to highlight the recent significant upgrades of the Cyprus economy by the rating agencies, especially the one by Moody’s by two notches, since it was the only Rating Agency where Cyprus was below investment grade until now. It is specifically important in the current market conditions of globally increased interest rates.  It has been achieved through the sacrifices of the Cypriot people and prudent, responsible, and disciplined fiscal policies in recent years. Reward of previous government policies and trust to the current one.

The Rating Agencies correctly trust that our government will follow prudent fiscal policy, which is cited as a primary reason for the favourable rating, along with its reform programme powered by European funding. As I already mentioned, fiscal stability and prudent management of public finances are the fundamental principles that govern the first budget of our administration.

The improved status of the Cyprus economy will be translated into perspectives and opportunities, attracting quality investments and creating new job positions.There are still risks that we need to address, as highlighted by the rating agencies, such as risks associated with the banking system that could jeopardise positive economic and fiscal dynamics and threats from climate change to which Cyprus is exposed, potentially undermining growth more than currently estimated.

The government will responsibly support the economy amid challenges like the Ukraine war, inflation, and the energy crisis. This involves promoting targeted and flexible economic policies to maximise the use of European funds and programs for growth, employment, and managing public finances. Support measures targeted to the vulnerable.

My fellow participants on the discussion panel, Mr Nicolaou and Mr Evgeniou, through their duties and expertise, are people who play a significant role in the overall effort of the government to promote financial stability and growth, and I am looking forward to an interesting discussion.

(RM/EP/SCH)