EU Finance Ministers, including Cypriot minister Makis Keravnos, have said that gradual recovery is expected in 2024, but have warned that this will be in an environment of heightened uncertainty and risks due to geopolitical turbulence

Keravnos participated in a Eurogroup meeting on Monday and the Economic and Financial Affairs Council of the EU (Ecofin) which was held on Tuesday in Brussels.

According to a finance ministry press release, the ministers in Ecofin focused on the main economic policy priorities for 2024, in the context of the European Semester.

In the conclusions adopted, ministers agreed that the the EU economy remains resilient despite a slowdown in 2023., and that a gradual recovery in growth is expected in 2024, supported by strong labour market returns and the ongoing process of disinflation, but in an environment of heightened uncertainty and risks due to geopolitical turbulence. The Council underlines the need for continued prudent fiscal policy in 2024, focusing on investment and reforms towards a green and digital transition.

Ministers then exchanged views in relation to the economic consequences of the Russian invasion of Ukraine, including the European Commission’s proposals on the use of revenues from assets of the Russian Central Bank. Also, the Belgian Presidency of the Council of the EU presented its priorities for the next six months.

On Monday, according to the same press release, Keravnos participated in a meeting of the Eurogroup, during which the International Monetary Fund (IMF) presented the results of its mid-term review of macroeconomic developments and prospects for the euro area economy, which are largely in line with those of the European institutions, as well as policy recommendations on the main economic priorities of the euro area.

Ministers were also briefed by the European institutions on the development of energy prices, and exchanged views on their impact on the euro area economy and in particular on the competitiveness of European economies. In this context, they discussed appropriate policies, both at national and collective level, to increase the resilience of the euro area economy to adverse energy shocks.

According to Tuesday’s press release, in his intervention on Monday, Keravnos highlighted the negative impact of the rapid increase in oil prices has had on the Cypriot economy over the last two years, particularly on inflation and the economy’s competitiveness, given the high dependence on fossil fuels for electricity and transport. He noted that natural gas is not yet available in the country’s energy mix, which is mostly oil-based and to a lesser extent dependent on renewable energy sources.

Keravnos then highlighted the importance over implementing the national recovery and resilience plans to achieve the green transition objectives, and presented the measures that Cyprus is implementing through its national plan, which constitute about 45 per cent of the total amount of funding.

Additionally, Keravnos noted that Cyprus has intensified its efforts to diversify its energy mix, putting an end to its energy isolation. To this end, it is developing its own natural gas fields with the prospect of exporting them in the next four to give years, developing the necessary infrastructure for the direct import of LNG, while it is accelerating the development of electrical interconnections that will allow for a much faster integration of renewable energy sources into the electricity system and the export of electricity from renewable sources.

Concluding his statement, the minister underlined the importance of close and continuous monitoring of energy prices, as well as their impact on competitiveness, both at national and euro area level, taking into account the increased geopolitical tensions.