Cyprus minister outlines public reforms and fiscal impact

Cyprus Finance Minister Makis Keravnos announced a series of key priorities, including reforms in the public sector and semi-governmental organizations. The government aims to improve employee evaluation systems, revise wage scales, and implement new corporate governance models that distinguish between strategic board oversight and daily management. Keravnos emphasized that the administration will maintain fiscal discipline, continue generating surpluses, and reduce public debt, explicitly ruling out austerity policies while committing to social support for vulnerable groups.

Simultaneously, the government faces significant fiscal costs related to upcoming tax and pension reforms, estimated at approximately €250 million annually. The pension reform, which includes pension increases and a 12% reduction in pension penalties, accounts for €50 million of this annual expense. The tax reform, driven by individual tax deductions and reductions in defense contributions from 17% to 5%, is expected to reduce state revenue by €200 million per year. Authorities expect to mitigate these losses through dividend revenue until 2028, though they anticipate potential revenue shortfalls after that period.