Cypriot Economy Shows Resilience and Positive Indicators, according to Finance Minister

Cypriot Finance Minister Makis Keravnos has reassured the public that the country's economy is on a solid path, despite concerns raised by the Fiscal Council and recent media reports.

The minister's statement came in response to an article published by the local newspaper Politis, which cited a report from the Fiscal Council that highlighted potential risks and the need for precautionary measures.

The Fiscal Council's interim report, released on Tuesday, pointed out notable delays in implementing commitments outlined in the Recovery and Resilience Plan (RRP). The council emphasized that a lack of reform initiatives backed by political courage was a "significant omission" that required immediate attention and stronger political will from both the executive and legislative branches.

The council's warning highlighted the medium-term risks posed by the delays, potentially jeopardizing public finances and limiting the country's maximum growth potential. However, despite these concerns, the Fiscal Council acknowledged the remarkable resilience of Cyprus' economy. The council projected a growth rate close to 2.4 per cent, while the central bank and the ministry estimated it at 2.6 per cent and 2.8 per cent, respectively.

Minister Keravnos responded to the report, affirming that the fundamental principle of the Ministry of Finance is to generate primary surpluses to ensure the economy's trajectory and meet the Maastricht criteria by the end of 2026. He emphasized that the government is closely monitoring developments on a daily basis to ensure continued progress in the coming years.

The minister refrained from directly commenting on the newspaper's headline but addressed statements made by the president of the Fiscal Council. He highlighted that the overall assessment acknowledged the positive state of the economy, emphasizing its stability and control.

Minister Keravnos presented key economic indicators to support his claim of a positive trajectory. During the period from January to May 2023, the fiscal balance amounted to €344 million, compared to €140.8 million for the corresponding period in 2022. Additionally, the public debt as a percentage of GDP decreased from 90 per cent in January-May 2022 to 83.6 per cent currently. He also noted that revenue growth stood at 15 per cent for the same period, while the expenditure growth rate reached 9.7 per cent.

The economy's positive momentum is also reflected in the Cyprus Composite Leading Economic Index (CCLEI), which registered a 2.1 per cent annual increase in June, according to the University of Cyprus' Economic Research Centre. The CCLEI, designed to provide timely signals for turning points in economic cycles, showed positive growth driven by domestic factors such as property sales, tourist arrivals, credit card transactions, and retail sales volume.

Despite the challenging economic and geopolitical environment, Cyprus' economy has demonstrated resilience, supported by various factors such as a decrease in public debt and positive revenue growth. The government's commitment to generating primary surpluses and closely monitoring economic developments reflects its determination to ensure sustained progress in the face of uncertainties.

By fLEXI tEAM