02/12/2022 16:24
The government submits a balanced budget, adapted to an era of geopolitical instability, said the Minister of Finance, Constantinos Petrides, presenting in the Parliament, the main pillars of economic policy, as reflected in the proposed State Budget for 2023 and the three-year fiscal framework 2023-2025 while calling on MPs to vote in favor.
Referring to the difficult economic situation of the country in 2013, he said that ten years later and despite the adversities and successive crises "we are today submitting a balanced budget and delivering, most importantly, a healthy and robust economy", with high growth rates, low unemployment, fiscally balanced and public debt below 90% of GDP, with a steady downward trend.
Referring to the difficult global economic situation, Petrides noted that "for this very reason we have adjusted the budget you have before you accordingly. It is a budget that has all these tools with which the Cypriot economy will be able to effectively face the great challenges of the new era in the economy."
A feature of this year's budget is the increase in expenses, but at the same time a reduction in the cost of servicing the public debt, added the Minister, noting that it includes an increase in primary expenses compared to last year, by approximately €554 million. "The increased expenses aim to promote the development perspective of the economy, which is our response to the crisis", he said.
Petrides noted that the budget is based on realistic and conservative macroeconomic forecasts. The Cypriot economy is expected to grow in 2022 at a rate of around 6%, after inflation. The growth rate of the economy in the 3rd quarter of 2022 reached 5.5%, compared to the corresponding quarter of 2021, which is the highest among the EU member states and more than twice the average of both the Eurozone and the EU.
In addition, he noted that in the medium term, the economy's growth rate, in real terms, will slow to around 3% in 2023, and is expected to rise to 3.3% in 2024 and 3.2% in 2025, while it is certain that some EU countries enter recession.
Regarding the unemployment rate, the Minister said that in 2022 it is expected to decrease to around 7%, compared to 7.5% in 2021. The continued growth of the economy is expected to lead to a further decrease in unemployment to around 6.4% in 2023, to 5.7% in 2024 and 5% in 2025. "An unemployment rate equivalent to full employment conditions and which allows the implementation of yet another major social reform of this government, the introduction of the minimum wage", he said.
In 2022 the fiscal balance of the General Government is expected to be in surplus of 1.2% of GDP (corresponding to €308.3 million), while the primary surplus is estimated at 2.7% of GDP (or €707.2 million) compared to a deficit of 1.7% of GDP and a primary surplus of 0.1% in 2021, respectively. The fiscal surplus is projected to widen during the three-year period 2023-2025 and to be formed as a percentage of GDP at 1.7%, 2.3% and 2.3% respectively, according to the data provided by the Minister, clarifying that the forecasts are valid "if of course the appropriate policies are followed".
At the same time, public debt at the end of 2022 will be limited to 89.3% of GDP, marking a significant decrease compared to 103.6% in 2021, while it is predicted, with the maintenance of a prudent fiscal policy, to continue its downward path reaching 83.3% of GDP at the end of 2023, to 76.5% at the end of 2024 and to be limited to 72.3% of GDP at the end of 2025, he said.
Petrides spoke of a new development model for the Cypriot economy, with the implementation of the "Vision 2035" program, prepared by the Economic and Competitiveness Council. "It is the first time since 1974 that the country is proceeding on the basis of a specific, holistic, optimistic but at the same time realistic Economic Development Model for all sectors of the economy. And it is the first time that the State budgets themselves, and the one you have in front of you, are drawn up based on this specific long-term development", he said.
Referring to the "Cyprus Tomorrow" plan and the Recovery Fund, he said that they foresee an impact of 4.4 billion euros for the period 2021 - 2027, and is expected to strengthen the growth of the economy by 7% in the Gross Domestic Product in the medium term, while creating more than 11 thousand well-paid jobs.
"The high growth rates have also led to a reduction in social inequalities precisely because in the last ten years we have managed to build a real welfare state that Cyprus has never had in the past", the Minister underlined.
In closing, he said that the coming years are expected to be quite difficult for the global and cypriot economy. "We consider that we have drawn up a budget of responsibility as well as development, which is called to support society and the economy in this difficult period, but at the same time has its eye on the future", he said.
"As a Government we deliver a robust economy, with positive growth rates, and low unemployment. But also with great challenges for the next government", he said, calling on the MPs to vote into law both the Budget for 2023 and the three-year fiscal plan for the period 2023-2025.