Finance Minister submits 2024 budget to House

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Finance Minister Makis Keravnos submitted the 2024 state budget, the first of the Nikos Christodoulides administration, to House Speaker Annita Demetriou on Wednesday.

Keravnos presented the budget to the House Speaker before the House Finance Committee discussed it for approval before being voted on towards the end of the year.

The House Finance Committee will launch the budget discussion on 23 October.

The vote is expected to take place mid-December, shortly before the House recesses for the Christmas Holidays.

Until then, the Finance Committee will meet twice a week to examine the budget before putting it to a vote.

The 2024 budget acquires additional importance, as it is the first budget of the government, revealing the political priorities of the new President elected in February.

“The goal of the 2024 budget and the medium-term fiscal framework for 2024 – 2026 is to address these challenges and stabilise conditions for sustainable economic growth,” Keravnos said, addressing Demetriou.

A GDP growth rate of around 2.9% is projected for 2024, while for the rest of 2023, the Cypriot economy is expected to register a positive rate of 2.5%, three times greater than the euro area average.

A Finance Ministry note accompanying the 2024 budget outlines eight goals and three concerns of the government, while it is estimated to record a fiscal surplus of €659 mln or 2.2% of GDP.

The cost of development projects increased by 12% compared to 2023, amounting to €1.47 bln.

As the Finance Minister had previously stated, social benefits are up by 15% compared to 2023, reaching €2 bln.

He pointed out that social welfare benefits increased by €56 mln, health benefits by €150 mln, education benefits by €10 mln, and benefits to Local Government Authorities by €22 mln.

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

Additionally, there is a restraint on public sector salaries, while the government also aims to narrow the public debt-to-GDP ratio to 72.9% from 80.9% in 2023.

Keravnos noted risks that currently threaten public finances, including hiking cost of living, which will negatively impact citizens’ income.

And the risk of an increase in interest rates that will lead to a slowdown in economic growth and the eventual need for new horizontal support measures resulting from the previous two factors.