Spending caps must be met says ministry

The finance ministry has urged all government departments to resist the temptation to spend above their budgets and stick to the expenditure caps set. Otherwise, public finances might be derailed, adversely impacting the country’s credit rating, it warned.

In a circular sent out to ministries and state agencies, the ministry’s permanent secretary Giorgos Panteli said spending must be reined in.

“Despite the difficulties brought about by the coronavirus pandemic, and the fallout from the war in Ukraine, macro-economic stability, keeping public finances robust, the competitiveness and resilience of the Cypriot economy continue to be our key objectives, aimed ultimately at creating conditions of prosperity and progress for our country,” the circular stated.

It went on to note that achieving the fiscal targets depended on adhering to the expenditure ceilings.

The overall spending cap for the central government has been set at €8.394 billion for 2023, €8.530 billion for 2024, and €8.626 billion for 2025.

“Any deviation jeopardises the achievement of fiscal targets and, by extension, the credibility of the Cypriot economy,” the circular added.

As such, ministries and state agencies were advised to refrain from proposing new policies to the cabinet that entail additional budgetary costs.

The finance ministry forecasts a 2.7 per cent growth in the economy this year, with the harmonised inflation rate estimated at 4.1 per cent.