Cyprus budget for 2019 will produce € 500 mln surplus

Bailed out Cyprus expects a budget surplus for a fourth consecutive year in 2019 with the state budget providing expenditure of EUR 7.91 bln euros and revenue of EUR 8.55 bln, Finance Minister Harris Georgiades said on Thursday.

“The strong recovery of the economy allows us to turn deficits into surpluses,” Georgiades told reporters after the cabinet approved the budget for 2019.

He said the budget surplus for 2019 will represent 3% of GDP while the GDP to public debt ratio should dip below 100 percent next year from 104% in 2018.

“We had a surplus of about EUR 60 mln in 2016, we had a surplus of approximately 350 million last year, and we expect a surplus of about half a billion this year and in 2019,” said Georgiades. He said the main objective was to consolidate growth and create conditions of full employment, “I think the state budget serves exactly this purpose”.

The economy is also expected to grow for a fourth consecutive year at a robust 3.8% in 2019 and this year would also be close to 4%.

The budget will be submitted to parliament for approval before the end of the year.

“The basic objective of economic policy is to consolidate development and I think that the state budget is a prerequisite for sustainable growth and avoiding deficits in the past,” Georgiades said.

“The budget provides revenue of EUR 8.5 bln and spending EUR 7.9 bln, generating a surplus of 3% of GDP. In 2019, growth is expected to reach 3.8% of GDP,” he added.

Georgiades was adamant there would be no slackening of fiscal policy.

“There will be no fiscal slippage in any way, there is an increase in public spending in a way that allows us to promote and implement a series of new projects and a long list of infrastructure projects.”

Cyprus has recovered relatively quickly from a 2013 bailout and registered 4% economic growth last year. In March 2013, it clinched a 10-billion-euro loan from the European Union and IMF to bail out its troubled economy and oversized banking system. Under the terms of the deal, the government was required to close the island’s second-largest bank, Laiki, and impose a 47.5% haircut on deposits above 100,000 euros at largest lender Bank of Cyprus.