Cyprus Fiscal Council evaluates 2027 state budget

The Cyprus Fiscal Council has released its assessment of the 2027 state budget, recommending a shift toward strategic investments and social policies while advocating for tighter control over operational expenses. Despite a generally positive fiscal outlook, the Council expressed concerns regarding the slow implementation of development projects and the sustainability of the public wage bill.

Key projections for the 2027 budget indicate a general government surplus of 3.9% of GDP, equivalent to €1,596.5 million. Public debt is forecasted to decline to 45.2% of GDP, down from 48.9% at the end of 2026. However, the Council highlighted that four out of six major investment projects allocated funds in the 2026 budget saw zero execution during the first half of the year. Furthermore, while the state wage bill is projected to decrease by 1.2% due to adjustments in pension scheme contributions, actual earnings for public sector employees are expected to rise by 4.2%.

The Fiscal Council emphasized that achieving numerical targets is insufficient without ensuring the long-term structural viability of public finances. These recommendations provide a framework for the government to refine its upcoming budget planning, focusing on the quality and timing of expenditures rather than merely the volume of allocated funds.