The Cabinet has approved the 2027 budget and the Medium-Term Fiscal Plan for 2027–2029, with total spending set at €11.1 billion, excluding debt servicing costs. The 2027 budget is €470 million higher than the 2026 budget and is forecast to deliver a fiscal surplus.
Finance Minister Makis Keravnos said the budget focuses on development, social policy, defence spending, reducing public debt, the green transition and digital transformation.
€1.1 billion in development spending
Development spending is expected to reach €1.1 billion in 2027, while capital expenditure will increase by 2.1% compared with 2026.
The government has said the budget aims to maintain a surplus while supporting economic development and social cohesion.
2027 economic forecasts
The Finance Ministry forecasts the following for 2027:
- Economic growth: 2.9%
- Unemployment: 4.5%
- Fiscal balance: surplus of 2.8% of GDP
- Primary balance: 4% of GDP
- Public debt: 46.6% of GDP, down from 49.9% in 2026
The government expects the economic outlook to remain positive over the medium term, while noting uncertainty linked to geopolitical tensions and wars.
Recent official data showed Cyprus’ economy grew by 3.3% year on year in the second quarter of 2026.
Public sector wage bill
The government plans to continue containing the public sector wage bill.
According to Keravnos, the 2027 budget provides for 51 fewer positions compared with the 2026 budget.
Public sector personnel costs are projected to account for 26.1% of the budget in 2027, compared with 27.2% in 2026 and 28.2% in 2025.
Tax and pension reforms
Keravnos said general government revenue increased by almost 3% in 2026, while expenditure increased by 1.4%.
Asked whether the cost of pension reform is included in the 2027 budget, he said the reform process has not yet been completed.
The state currently spends around €350 million on pensions, he said, adding that existing costs have been included in the budget and that potential additional costs, including those linked to pension reform, have been taken into account.
The 2027 budget will now proceed to Parliament, with approval expected in December.
Also read: Cabinet approves bill to introduce minimum age for social media use
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