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Investor Presentaiton

Public finances in a solid surplus position • The government policy is for a growth-friendly fiscal stance safeguarding the maintenance of robust primary surpluses supporting a sustained reduction of public debt. The budget reflects a continuation in the employment policies adopted by the government and places emphasis on reallocation of expenditure towards growth-enhancing activities. • Over the past few years the fiscal position has been positive and is expected to peak in 2019 at a surplus of 3,8% of GDP. In the years 2020-22 the budget surplus is expected to fall marginally mostly due to increased expenditure associated with the gradual abolition of wage cuts, and the introduction of the national health system. In 2018 Cyprus recorded the largest fiscal surplus in the EU. • The budget is designed to achieve the medium term objective of a balanced fiscal position in structural terms. Evolution of main fiscal indicators, % of GDP 6,2 5,7 5,1 4,8 4,3 4,5 3,8 3,4 3,0 2,7 2,7 2,5 2,3 1,8 0,3 -0,3 Primary balance Fiscal balance 2015 2016 2017 2018 2019f 2020f 2021f 2022f Budget balance 2018, % of GDP 2,4 2,0 1,7 1,5 1,1 0 -0,5 -0,5 -0,6 -1,5 -2,1 -2,5 -2,5 3,4 Cyprus Luxemburg Malta Germany Netherlands Greece Ireland EA Average Portugal EU Average Italy France Spain Source: Ministry of Finance Note: The budget outcomes of 2014-15 and 2018 exclude government contributions for the Cyprus Cooperative Bank Note: "f" denotes forecasts by the Ministry of Finance as of September 2019. All forecasts are based on assumptions and there can be no assurance they will be realised. 16
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