The Council of Ministers approved on Wednesday the 2024 state budget estimated to record a fiscal surplus of €659 million or 2.2% of GDP, with the Minister of Finance Makis Keravnos stressing that 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,” the Minister said in statements following the Cabinet’s meeting in Nicosia.

Keravnos said that in drafting next year’s budget, the government has weighted the significant uncertainty marking the current economic juncture, the challenges facing the economy, such as direct consequences by new sanctions on Russia and Belarus, high inflation which erodes real income and reduces public revenue due to reduced consumption, high interest rates which slow down economic growth as well as the impact of increased migrant flows.

“The budget of 2024 and the 2024 – 2026 Medium Term Fiscal Framework’s aim is to tackle these challenges and consolidate conditions of sustainable growth for the economy,” Keravnos stressed.

According to the Finance Minister, the budget projects a growth rate of 2.9% for 2024, while in 2023 economic growth is estimated to reach 2.5%, which is expected to be three times greater that the Euro area average. “It shows that our economy is in a sound course and with this budget we would like to maintain this correct course of the economy for the benefit of our society,” he added.

Moreover, the budget features total revenue for the General Government amounting to €13.2 billion and total expenditure of €11.8 billion, generating a budget surplus of €659 million or 2.2% of GDP, while the primary surplus (excluding debt servicing spending) is estimated at €1.09 billion or 3.6% of GDP. Furthermore, under the budget assumptions the unemployment rate is estimated to decline to 5.8% in 2024 from an estimated 6.5% in 2023.

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

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

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

The Minister also noted that an additional aim of the next year’s 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.

Responding to a question on possible new measures to tackle rising prices, Keravnos said that the budget includes the measures that are being implemented now and noted that funds have been included for additional measures which may be considered by the government.

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