Cyprus cabinet approves 2027 state budget with increased focus on defense and social policy

On September 16, 2026, the Cypriot Council of Ministers officially approved the state budget for 2027 and the Medium-Term Fiscal Framework for 2027-2029. Finance Minister Makis Keravnos announced that the budget totals €11.1 billion, representing an increase of approximately €470 million compared to the previous year. The proposal aims to maintain fiscal stability while navigating geopolitical uncertainties stemming from conflicts in Ukraine and the Middle East.

The government forecasts a 2.9% economic growth rate, with the potential for higher performance, and expects a fiscal surplus of 2.8% of GDP. A key feature of the 2027 budget is the significant increase in defense spending, with allocations reaching €300 million to address security needs. Additionally, the plan includes over €1 billion for social protection, reflecting the government's objective to support vulnerable groups without resorting to austerity measures. Public debt is projected to decline to 47% of GDP, continuing a downward trend from post-2013 highs.

The budget bill is scheduled to be submitted to the House of Representatives by the end of September, with parliamentary discussions expected to commence in October and final voting projected for December. The Ministry of Finance is currently finalizing budgets for semi-governmental organizations to complete the national financial planning process.