The Cabinet approved on Wednesday the 2020 State Budget which forecasts that the Cypriot economy will grow by 2.9% in the next year.
The 2020 state budget, which was approved today by the Cabinet, is balanced with a fiscal surplus, Finance Minister Harris Georgiades told the press, at the Presidential Palace where the Cabinet meets under the President of the Republic. The budget foresees a fiscal surplus of 2.7% and a primary surplus of 5.1%.
The Minister noted that no further measures, taxes or other financial burdens were needed, but added that there was a significant increase in health expenditures as result of the implementation of the national health system GESY and the operation of the State Health Services Organisation OKYPY.
He added that the budget forecasts a growth rate of 2.9% which would lead to conditions of full employment. The Government’s revenues were estimated to reach 10 billion euro while expenditure was estimated to be 9.4 billion euro.
Inflation was projected to stand at 1.2%, while the unemployment rate was expected to drop to around 6%. Public debt was expected to fall to 91.1% as a result of an early repayment of debt to the International Monetary Fund scheduled for 2020.
“This is yet another state budget without a deficit. Bad practices belong to the past with no return”, Georgiades noted.
He said that the budget enables the implementation of the government’s program, adding that one-billion-euro worth of projects are underway, while it foresees projects and investments in e-governance and digital transformation worth 250 million euro. The budget also foresees expenditures for new policies such as the establishment of an investment fund to finance new innovative enterprises as well as the establishment of a Deputy Ministry for Innovation and Digital Policy.
Georgiades noted that a Troika mission that is currently paying a visit to the island would be informed about budget assumptions. He added that the budget would be sent to the Parliament beginning of October.
Replying to a question, the Minister warned that the biggest and immediate potential risk that could undermine fiscal stability would be a decision of the Supreme Court to restore public service pay cuts. Following an administrative court decision last March that salary reductions imposed on civil servants as part of austerity measures in 2012 were unconstitutional, the state’s Law Office filed an appeal to the Supreme Court which is now expected to rule on the case.
On Brexit, the Minister said that Cyprus was “adequately prepared for any eventuality”.