Nicosia: Cyprus’ state budget for 2026 is designed to meet the evolving challenges of the current economic situation while strengthening growth and maintaining a strong social footprint, Finance Minister Makis Keravnos told the plenary of the House of Representatives on Thursday, presenting the third budget of the Christodoulides administration.
According to Cyprus News Agency, the 2026 state budget and the Medium-Term Fiscal Framework are a concrete demonstration of the government’s commitment to stable growth, fiscal responsibility, and social progress. Keravnos noted that the new budget has been drafted under the EU’s revised Economic Governance framework, adopted in June 2024. The government’s objective is to reinforce economic expansion ‘from which as many of our fellow citizens as possible can benefit,’ following a model of inclusive and balanced development.
Despite persistent global turbulence, the Finance Minister said the Cypriot economy continues to show resilience, supported by strong growth, low unemployment, and sustainable public finances. He acknowledged that the ongoing war in Ukraine and rising protectionism in global trade continue to create uncertainty, but assured that Cyprus is projected to preserve its growth momentum.
The 2026 budget allocates pound 10.7 billion in primary expenditure, marking a 5% increase year-on-year. Development spending is set to rise by 4.7% in 2026, while social benefits will increase by 6.7%, covering expenditures in education, health, and social welfare. Keravnos highlighted that between 2026 and 2028, the government will channel pound 6.82 billion in support to vulnerable groups, students, children, patients, and persons with disabilities.
He emphasized the necessity of maintaining fiscal surpluses ‘to respond to unexpected events, which have become far more frequent,’ calling for the continuation of prudent economic policy.
According to the Ministry’s projections, Cyprus’ GDP growth is expected to reach 3.1% in 2026, ease to 3.0% in 2027, and reach 2.9% in 2028. Unemployment is forecast at 4.6% in 2026-27 before edging down to 4.5% in 2028, reflecting conditions of near-full employment. Inflation is projected to stabilize close to 2% over the medium term, with the 2026 fiscal balance expected to post a surplus of 2.9% of GDP, and the primary surplus reaching 4.3%.
Keravnos pointed to an upbeat assessment by the European Commission under the European Semester, noting that GDP growth reached 3.6% in the first half of 2025, investments rose by 10.4%, and fiscal surpluses remained strong.
The Finance Minister stressed that the government is advancing a broad reform agenda aimed at modernizing society, supporting entrepreneurship, and improving living standards. Central to this is the tax reform package now before Parliament. He noted that Cyprus has so far received pound 568 million in Recovery and Resilience Facility funds-46.6% of the total envelope.
He also stressed the importance of a robust financial system able to support households and businesses ‘without repeating the risks of the recent past.’ Describing the 2026 budget as ‘an investment in the country’s future,’ Keravnos urged MPs to approve it, saying it paves the way for ‘a stable, creative, and optimistic future for our citizens, businesses, and future generations.’