Cyprus Aims for 3.5% Budget Surplus Over Next 3 Years

Strategic Insights -

Cyprus is expected to achieve a budget surplus of 3.5% of GDP over the next three years, according to the country's Finance Ministry. The ministry has published a strategic fiscal policy framework for 2026 to 2028, outlining the government's economic policy goals and priorities. The framework forecasts stable economic growth, with GDP growth expected to range between 2.9% and 3.1% during the period. The government aims to reduce public debt to 43.3% of GDP by 2028, down from 54.7% in 2025.

Key Takeaways:

  • Cyprus expects to achieve a budget surplus of 3.5% of GDP in 2025, increasing to 3.7% annually until 2028.
  • GDP growth is forecast to range between 2.9% and 3.1% during the period 2026-2028.
  • Public debt is expected to decline to 43.3% of GDP by 2028, down from 54.7% in 2025.
  • Unemployment is projected to fall to 4.7% in 2025 and 2026, and then to 4.5% in 2027 and 2028.
  • Inflation is forecast to stabilize at 2.1% from 2025 to 2028, down from 1.9% in 2025.
  • The government aims to reduce its reliance on external funding, with the annual funding programme for 2025 setting a maximum total financing amount of up to €1.5 billion.
  • The government will continue to issue bonds to individuals and monthly treasury bills, with expected central government revenues of €10.23 billion in 2026, €10.76 billion in 2027, and €10.98 billion in 2028.

Statistics:

  • Budget surplus: 3.5% of GDP in 2025, increasing to 3.7% annually until 2028.
  • GDP growth: 2.9% in 2026, 3.1% in 2027, and 2.9% in 2028.
  • Public debt: 54.7% of GDP in 2025, 52.6% in 2026, 48.4% in 2027, and 43.3% in 2028.
  • Unemployment: 4.7% in 2025 and 2026, 4.5% in 2027 and 2028.
  • Inflation: 1.9% in 2025, 2.1% from 2026 to 2028.
  • Central government revenues: €10.23 billion in 2026, €10.76 billion in 2027, and €10.98 billion in 2028.
  • Total expenditure ceilings: €10.54 billion in 2026, €10.73 billion in 2027, and €11.2 billion in 2028.

Sources:

  • "Strategic Fiscal Policy Framework 2026-2028" (Finance Ministry, Cyprus) [1]
  • "National Medium-Term Fiscal and Structural Plan 2025-2028" [2]
  • "Recovery and Resilience Plan" [3]
  • "Thaleia programme" [4]
  • "Cyprus' upcoming EU Presidency" [5]