2025 State Budget Approved by Cabinet for Economic Growth and Stability
The Cabinet has officially approved the 2025 state budget, along with a medium-term financial plan covering the years 2025 to 2027. This strategic decision sets the stage for economic growth, sustainability, and fiscal responsibility over the next few years.
Finance Minister Makis Keravnos explained the government’s vision for the 2025 state budget. The key priorities include maintaining a budget surplus, controlling public sector employment, reducing public debt, and advancing the green transition and digital transformation. These efforts aim to create a stronger and more resilient economy.
Priorities for the 2025 State Budget
The main focus of the 2025 state budget revolves around several key areas, which include:
- Budget Surplus: Ensuring the country maintains a healthy financial surplus is a top goal.
- Public Sector Control: Restraining the growth of public sector employment to ensure efficiency.
- Public Debt Reduction: Reducing the national debt to strengthen the economy.
- Green and Digital Transformation: Promoting environmental sustainability and embracing technological advancements.
The 2025 state budget will set the foundation for sustainable growth, particularly in essential sectors like education, health, and infrastructure.
Increased Investment in Key Sectors
In 2025, the government will allocate more resources to crucial areas. Finance Minister Keravnos confirmed that development spending will increase by 2.1% compared to 2024, and public spending on education, healthcare, and social benefits will rise by 5.2%. This ensures that the 2025 state budget prioritizes essential services for citizens.
Infrastructure projects that bring “significant added value” are considered critical to driving the country’s growth forward. The government’s goal is to enhance the economy while maintaining a stable financial system under the 2025 state budget.
Employment and Public Sector Trends
Over the past three years, public sector employment increased, but for 2025, the state budget envisions a minor reduction in the number of public sector employees. By the end of 2025, there will be four fewer public employees, aligning with long-term trends that have reduced the public workforce by over 1,500 workers since 2012.
This focus on public sector efficiency is a key element of the 2025 state budget, which aims to balance employment while ensuring the government operates effectively.
Cyprus’ Economic Outlook for 2025 and Beyond
Minister Keravnos highlighted Cyprus’ positive medium-term economic outlook, though he acknowledged the uncertainty surrounding the global economy. According to the 2025 state budget, the gross domestic product (GDP) is expected to grow at around 3.7% throughout the year, helping the country maintain a strong labor market and reduce unemployment.
The 2025 state budget also anticipates the unemployment rate will drop slightly from 5% to 4.8%. The government expects a budget surplus of 3.3% of GDP, while public debt is projected to fall to 64.2% of GDP by the end of 2025. This consistent progress demonstrates the strength of the 2025 state budget in supporting long-term economic health.
Credit Rating and Economic Confidence
The 2025 state budget is also being boosted by recent positive credit rating upgrades. Cyprus has seen upgrades from major rating agencies, with Finance Minister Keravnos calling them proof of the country’s progress. In June, Fitch upgraded Cyprus’ rating from BBB to BBB+, a sign of confidence in the government’s financial management.
President Nikos Christodoulides echoed these sentiments, describing the upgrades as a “vote of confidence” in the 2025 state budget and the government’s strategy for economic stability and growth.
Green Transition and Digital Transformation
One of the most significant aspects of the focus on green transition and digital transformation. These two areas are essential for ensuring that Cyprus remains competitive in a rapidly changing global economy. By investing in renewable energy, environmental projects, and digital infrastructure, the 2025 state budget is laying the groundwork for sustainable economic growth.
Public Sector Efficiency and Debt Reduction
In the past, the number of public employees had grown steadily. However, the 2025 state budget marks a shift towards greater efficiency in the public sector, with a small reduction in workforce planned. This will help reduce public debt and maintain a budget surplus, key goals of the 2025 state budget.
The government’s strategy to decrease public debt is working, with a target to reduce it to 64.2% of GDP by the end of 2025. The long-term aim is to bring it well below 60%, securing the country’s financial future under the guidance of the 2025 state budget.
Positive International Outlook for Cyprus
Earlier in the year, the International Monetary Fund (IMF) praised Cyprus for its economic resilience. According to the IMF, Cyprus recovered swiftly from the COVID-19 pandemic and is performing better than many European nations. The 2025 state budget continues this momentum, ensuring the country stays on a stable path to growth.
Inflation is expected to stabilize at around 2%, helping maintain purchasing power and consumer confidence. These elements are vital for the success of the 2025 state budget.
In conclusion, the 2025 state budget represents a strong, forward-thinking plan for Cyprus’ future. By focusing on maintaining fiscal responsibility, supporting key sectors, and embracing the green transition and digital transformation, the government is setting Cyprus up for sustainable growth and stability.
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