Cyprus’s proposed €14.4 billion state budget for 2027 will come before the House Finance Committee on Monday, as Finance Minister Makis Keravnos presents the government’s spending plans, economic forecasts and fiscal priorities.
Scheduled to begin at 9:15 am, the hearing will launch parliament’s review of allocations for ministries, government departments and state institutions.
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Social Welfare, Healthcare And Education Spending To Rise
Total expenditure is projected to reach €14.4 billion, up from €13.7 billion in 2026, an increase of approximately €700 million, or 5.1%. Excluding debt servicing, spending is expected to stand at around €11.1 billion, with priorities including social welfare, healthcare, education, infrastructure and economic development.
Social welfare benefits account for €820 million. Healthcare funding is set to reach €1.066 billion, up 3.7% from 2026, while education spending will increase by 13.8% to €235 million. Road infrastructure funding is projected to rise by 17.4% to €148.8 million.
Transfer payments remain the largest spending category, increasing from €4.24 billion to €4.49 billion. These cover social benefits, contributions to the Social Insurance Funds and the General Healthcare System (Gesy), alongside transfers to public organisations and local authorities.
Personnel expenditure is expected to edge up from €3.71 billion to €3.75 billion, while operating costs are projected to rise by 15.4% to €1.86 billion. Higher spending is linked partly to defence and policing requirements, water purchases and maintenance.
Infrastructure Investment And Defence Priorities
Capital expenditure is forecast at €594.5 million, up 2.1%, for public buildings, roads and other infrastructure. Major projects include €27.9 million for the new Cyprus Museum, €18 million for the Paphos-Polis Chrysochous Road, €15.9 million for the Deneia-Akaki-Astromeritis road and €13.5 million for the new Legal Service building.
Overall development expenditure is expected to reach €1.165 billion. The government also plans to reduce permanent public-sector posts by 51 compared with 2026.
Defence spending is set to increase from €176.8 million in 2026 to €430.15 million in 2027. This allocation forms part of a €1.28 billion programme covering 2027-2029, focused on military equipment and infrastructure.
Growth Forecasts And Fiscal Targets
GDP growth is forecast at 2.9% in 2027, with inflation expected to reach 2.5%. When submitting the budget to House President Annita Demetriou on September 24, Keravnos said unemployment was expected to settle at around 3.8%, while public debt was projected to fall to 45.2% of GDP by the end of the year.
He also forecast a fiscal surplus of approximately 4% of GDP, which would mark the third consecutive year of a positive balance.
These projections differ from earlier government estimates issued in September, which put the headline fiscal surplus at 2.8% of GDP, the primary surplus at 4% and public debt at 46.6% of GDP. The revised figures are expected to feature in the economic outlook presented to lawmakers.
Economic Uncertainty Adds To Budget Debate
Parliamentary deliberations come amid geopolitical uncertainty, with developments in the Middle East and volatility in international energy markets posing potential risks to economic growth and inflation.
In a statement on Sunday, the Finance Ministry described the budget as balanced and people-centred. According to the ministry, prudent public-finance management has enabled the government to direct more resources towards social policy, healthcare, education and development while maintaining economic stability.
Officials also expressed readiness to engage in constructive dialogue with parliament, arguing that approval of the budget would support the smooth functioning of the state and delivery of planned projects and programmes.
Parliamentary Review To Continue Through November
The Finance Committee is scheduled to examine individual ministry allocations until November 16, followed by a three-day plenary debate and vote in December.
