Cyprus cabinet approves 2027 state budget and medium-term fiscal framework

On September 16, 2026, the Cypriot Council of Ministers approved the state budget for 2027 and the Medium-Term Fiscal Framework for 2027–2029. Presented by Finance Minister Makis Keravnos, the budget totals €11.1 billion—excluding debt servicing—marking an increase of approximately €470 million compared to the previous year. The proposal prioritizes fiscal stability, social cohesion, and increased defense spending, while aiming to maintain a fiscal surplus.

Economic projections for 2027 estimate a growth rate of 2.9%, with potential to exceed 3%, and unemployment remaining near full-employment levels at 4.5%. The government expects a fiscal surplus of 2.8% of GDP and a primary balance of 4%. The strategy emphasizes reducing public debt, advancing green and digital transitions, and containing the public sector wage bill, which includes 51 fewer positions than in the 2026 budget.

Despite positive outlooks, authorities highlighted risks from geopolitical tensions in Ukraine and the Middle East, energy price volatility, and potential infrastructure challenges. The draft budget is expected to be submitted to the House of Representatives for parliamentary debate and a final vote in December.