Cabinet approves 2024 surplus budget

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The Cabinet approved Wednesday the 2024 state budget, the government’s first, estimated to record a fiscal surplus of €659 million or 2.2% of GDP.

Finance Minister Makis Keravnos said the budget aims to “maintain the economy’s sound course for the benefit of our society.”

“The 2024 budget is drafted in the context of the government’s expressed economic policy on fiscal discipline and to safeguard fiscal stability,” he said after the Cabinet meeting.

Keravnos said that in drafting next year’s budget, the government weighed the significant uncertainty marking the current economic juncture.

And the challenges facing the economy include direct consequences of new sanctions on Russia and Belarus, high inflation, which erodes real income and reduces public revenue due to lower consumption, high interest rates, which slow economic growth and the impact of increased migrant flows.

“The budget of 2024 and the 2024–2026 Medium Term Fiscal Framework aims to tackle these challenges and consolidate conditions of sustainable growth,” Keravnos said.

According to the Finance Minister, the budget projects a growth rate of 2.9% for 2024, while in 2023, GDP growth is estimated to reach 2.5%, which is expected to be three times greater than the Euro area average.

“It shows that our economy is on a sound course, and with this budget, we would like to maintain this correct course of the economy.”

The budget features total revenue for the General Government of €13.2 bln and total expenditure of €11.8 bln, generating a budget surplus of €659 mln or 2.2% of GDP.

The primary surplus (excluding debt servicing spending) is estimated at €1.09 bln or 3.6% of GDP.

Furthermore, under the budget assumptions, the unemployment rate is estimated to decline to 5.8% in 2024 from 6.5% in 2023.

“These budget surpluses are necessary to achieve our targets and European obligations to reduce government debt to 60% of GDP by 2026 while implementing the government’s development and social policy”.

Keravnos said the budget has “a strong growth element,” as it incorporates the Recovery and Resilience Plan projects and other development expenditure for infrastructure and government buildings.

He noted that development expenditure will increase by an annual 12% in 2024 to €1.47 bln, while social welfare provisions are up 15% to almost €2 bln.

Another aim of the budget is to contain the public wage bill, pointing out that new public sector jobs are limited to 52 in 2024 compared with 485 in the 2023 budget.

On rising prices, Keravnos said the budget includes measures being implemented now and noted that funds have been included for additional measures that the government may consider.

Clear imprint

President Nikos Christodoulides said his first budget reflects the clear imprint of the government’s policy priorities.

“It’s a surplus budget that transforms the core principles of the governance program into costed and achievable investments and reforms, placing people at the centre of all policies.

“Achieving a sustainable and resilient economy and promoting green and digital transition through modern governance are primary objectives.

The President said that with an estimated GDP growth rate of 2.9% for 2024 and the generation of surpluses, “we ensure a robust economy, which serves as our best defence for promoting targeted social policies and creating security conditions”.

He said emphasis is placed on the real economy through developmental expenditures, which enhance competitiveness, productivity, and overall employment income while simultaneously creating new high-quality job positions.

“Strengthening the competitiveness of our economy will enable the implementation of targeted actions in crucial sectors such as education, health, and social welfare.

“The substantial support for the middle class, the improvement of citizens’ daily lives, and the effective addressing of the impacts of inflation constitute the pillars of an innovative governance model with a strong social and developmental focus.”