Insider Economy Cyprus budget deficit for 2020-2023 forecasted due to coronavirus

Cyprus budget deficit for 2020-2023 forecasted due to coronavirus

The island’s Ministry of Finance forecasts a budget deficit for the period 2020-2023 and an increase in public debt as a percentage of GDP in 2020 due to fresh economic conditions sparked by the coronavirus.

This is based on the state budget for 2021 report which was approved by Cabinet on Wednesday and whch Finance Minister Constantinos Petrides referred to as an “emergency” budget.

The government budget for 2021 predicts revenues of €8,861,318,757 and primary expenditures (excluding loan repayments and interest expenses) of € 7,609,847,339, with the primary balance amounting to € 1,251,471,418.

According to the data of the Ministry of Finance, the budget of 2021 and the Medium – Term Fiscal Framework (MTF) 2021-2023 were prepared in very difficult conditions. The COVID-19 pandemic crisis inevitably affected fiscal data not only in Cyprus but also worldwide, it is noted.

“The current crisis is different from the previous ones – there is uncertainty about the extent and intensity of the crisis, which makes economic planning difficult. The new economic conditions lead, according to the forecasts of the Ministry of Finance, the fiscal balance to a deficit position in 2020-2023 and to an increase in public debt as a percentage of GDP in 2020 “, it is added.

The Ministry points out that due to the fact that public debt as a percentage of GDP, remains high, it becomes absolutely necessary to maintain the ceilings as finally formulated in the 2021 budget bill and the 2021-2023 MTF.

In the three years 2021-2023, an amount of € 3,200 million is expected to be spent on development projects, € 4,907.4 million on social benefits, € 240 million on e-government projects and € 565.4 million for business support (implementation of projects).

Describing the main goals, the Ministry of Finance says that the proposed state budget continues the implementation of important projects and programs, the sustainable recovery from the crisis caused by the COVID-19 pandemic and dealing with its economic and social consequences. Other budget goals are the stabilization and reactivation of the economy and the implementation of structural reforms, in order to lay the foundations for recovery and job creation in conditions of social cohesion.

In relation to employment policy, it is noted that 2021 budget continues to include measures to contain employment and the amount of benefits and allowances. The Government also stops hiring temporary staff, aiming to cover the needs of the public service in staff by filling permanent positions.

It also continues not to offer general salary increases and attempts to contain other direct or indirect salary increases.

The fiscal risks, according to the presentation of the Ministry of Finance, are a possible outbreak of the coronavirus pandemic in Cyprus, resulting in the deterioration of economic activity, as well as the challenges facing the banking sector due to the very high percentage of non-performing loans (despite the significant reduction achieved).

Also, the Ministry points out the challenges and excessive costs that may arise from the improper operation of the General Health Scheme (GHS) and the increased flow of migrants.

The main categories of expenditure in the 2021 budget concern, inter alia, personnel expenditure of € 2,946 million (27.9%), operating expenditure of € 896 million (8.5%), transfers of 2,982 million (28, 2%) and loans amounting to € 2,426 million (23%).


Top Stories

122 new cases, one death announced on Friday

The Health Ministry announced the death of one person due to COVID-19. This raises the death toll from the virus in Cyprus to 179,...

Where to get antigen rapid tests on Saturday

The Health Ministry announced the following antigen rapid test sites for Saturday, 23 January 2021: LIMASSOL Grigoris Afxentiou Square 08:30-16:30 Gafkos Clerides Park, Germasoyia 08:30-16:30 Municipal Hall Ypsonas...

Civil servants’ trade union requests psychological support for health professionals

PASYDY, the civil servants’ trade union requested psychological support for health professionals due to the consequences of COVID-19 on their health. The trade union noted...

Scientific advisory committee to convene on Monday under President Anastasiades

Cyprus President, Nicos Anastasiades, will preside on Monday morning over a meeting of the scientific advisory committee on COVID-19. According to CNA information, during the...

Polish medics depart for Slovakia to help mass testing

A group of 200 Polish medics departed for neighbouring Slovakia on Friday (January 22) to help in a week-long testing campaign in the central...


Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...


No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...