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Six Strategic Goals Define Cyprus’s 2026 State Budget And Mid-Term Fiscal Framework

by THEFUTURE.TEAM

October 8, 2025

Overview Of The Fiscal Objectives

The 2026 state budget, together with the Mid-Term Fiscal Framework for 2026-2028, is built on six strategic goals. These include maintaining a surplus fiscal balance, preserving public sector employment, reducing public debt over the medium term, advancing the green transition and digital transformation, fostering sustainable growth in key economic sectors, and upholding a resilient financial system. Finance Minister Makis Keravnos announced that the budget, capped at €10.7 billion excluding debt servicing costs, reflects a methodical approach to sustaining economic stability and growth.

Fiscal Discipline And Strategic Investments

The government has signaled a focused commitment to fiscal discipline, as developmental expenditures are set to rise by 4.7% in 2026 compared to 2025. Notably, social benefits—including education, health, and social welfare spending—will see an approximate increase of 6.7%. This disciplined fiscal policy is underscored by efforts to generate primary surpluses and to maintain long-term fiscal balance, averaging around 3.4% of GDP through 2028.

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Managing Geopolitical And Climate Risks

External risks, particularly those emanating from volatile geopolitical developments, present potential headwinds for domestic economic activity. Moreover, the budget acknowledges the adverse impacts of climate change, including natural disasters and the consequent need for infrastructure and compensation investments in the primary sector. The prospect of complex challenges—such as the termination of natural gas supplies from specific sources—necessitates cautious and proactive risk management.

Infrastructure Projects And Public Sector Efficiency

Key to the 2026 budget is the emphasis on high-value-added infrastructure projects, including co-financed initiatives and the successful execution of the Recovery and Resilience Plan. In parallel, public sector reforms have led to a reduction in permanent staffing positions for the second consecutive year. The plan calls for the creation of 458 positions while eliminating 472 roles, underlining a commitment to streamline public administration without compromising essential services.

Tax Revenue And Operational Spending

The budget projects strong tax revenues, with direct taxes expected to reach €4 billion in 2026, rising steadily in subsequent years. Revenue contributions from indirect taxes—including VAT and excise duties on alcohol, tobacco, and energy—are forecast to support a robust fiscal framework. On the spending side, operational costs, covering maintenance, training, consultancy services, and even unforeseen expenses, are anticipated to increase by 11.8%, reflecting investments in critical areas such as water acquisition and defense and security.

Ensuring Competitiveness In Public Payroll

Addressing the hot-button issue of public sector payroll, the Finance Minister confirmed efforts to restrain wage-related expenditures. In 2026, the public payroll is projected to account for 27.5% of the budget—down from 28% in 2025—demonstrating a commitment to fiscal prudence while balancing competitive compensation in education, healthcare, and other vital sectors.

Outlook And Strategic Implications

Overall, the budget reflects a long-term strategy that seeks not only to safeguard Cyprus’s fiscal position—by keeping the public debt to GDP ratio on a declining path towards 43.6% by 2028—but also to balance the dual imperatives of growth and risk management. With projected economic growth of around 3.1% in 2026 and an unemployment rate nearing 4.6%, the framework is designed to navigate uncertainties while laying a solid foundation for future prosperity.

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Central Bank Of Cyprus Balance Sheet Reflects Strong Eurosystem Position

by THEFUTURE.TEAM

February 17, 2026

Overview Of Financial Stability

The Central Bank of Cyprus (CBC) has released its latest balance sheet, reaffirming its steadfast role within the Eurosystem. The balance sheet, featuring total assets and liabilities of €29.545 billion, underscores the institution’s stable financial posture at the close of January 2026.

Asset Allocation And Strategic Holdings

Governor Christodoulos Patsalides issued the balance sheet, which details the CBC’s asset composition under the Eurosystem framework. Notably, the bank’s gold and gold receivables amounted to €1.635 billion, providing a significant hedge and stability to its balance sheet. Additional asset categories include claims on non-euro area residents denominated in foreign currency at €1.099 billion, while claims on euro area residents in both foreign and domestic currency add further depth to its portfolio.

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The most substantial asset category, intra-Eurosystem claims, reached €19.438 billion, an indication of the CBC’s deep integration with its European counterparts. Furthermore, euro-denominated securities held by euro area residents contributed €6.587 billion. Despite a marked emphasis on these areas, lending to euro area credit institutions in monetary policy operations recorded no activity during the period.

Liability Structure And Monetary Policy Implications

On the liabilities side, banknotes in circulation contributed €3.218 billion. Liabilities to euro area credit institutions associated with monetary policy operations were notably the largest single category, totaling €17.636 billion. Supplementary liabilities included those to other euro area residents, which aggregated to €4.989 billion, with government liabilities playing a predominant role at €4.754 billion.

Other liability items, such as claims related to special drawing rights allocated by the International Monetary Fund at €494.193 million, and provisions of €596.571 million, further articulate the CBC’s exposure. Revaluation accounts stood at €1.643 billion, and overall capital and reserves were confirmed at €333.822 million, completing the picture of a well-capitalized institution.

Conclusive Insights And Strategic Alignment

The detailed breakdown illustrates the CBC’s sizeable intra-Eurosystem exposures, reinforcing its central role within Europe’s monetary landscape. With an asset-liability balance maintained at €29.545 billion, the CBC’s financial position remains robust, indicating a commitment to structural stability and strategic risk management.

This fiscal disclosure not only provides transparency into the CBC’s operations but also serves as a benchmark for comparative analysis among other central banks within the Eurosystem, highlighting the intricate balance between asset liquidity, regulatory oversight, and monetary policy imperatives.