The European Commission has projected a significant reduction in Cyprus' debt-to-GDP ratio, estimating a decrease of nearly 30% by the end of 2024 compared to the figure at the end of 2021.

In line with the European Semester framework, the Commission recently approved Cyprus' draft budgetary plan for 2024. This endorsement, given on Tuesday, acknowledges that the budget aligns with the Council's earlier recommendations.

“The Commission believes that Cyprus' Draft Budgetary Plan is consistent with the Council Recommendation of 14 July 2023,” stated the Commission. This assessment reflects Cyprus' successful achievement of its medium-term fiscal goals, including an expected structural surplus of 1.2% this year, rising to 1.9% in the next.

Given these accomplishments, the Commission advised Cyprus to maintain its robust fiscal stance in 2024. It emphasized, however, the need to phase out support measures in the coming year. The Commission had previously recommended in July 2023 that Cyprus gradually withdraw its support initiatives as soon as feasible in 2023 and 2024. It also advised that any necessary reintroduction of support due to rising energy prices should focus on aiding vulnerable households and firms, ensuring fiscal affordability, and promoting energy conservation.

Moreover, the Commission commended Cyprus for adhering to recommendations to sustain public investments in 2024, projected to be about 2.8% of the nation's GDP.

Regarding Cyprus' fiscal balance, the Commission anticipates that the country's budget surplus will be slightly lower than the budget’s forecast of 2.8% of GDP, settling around 2.1%. This adjustment accounts for recent policy measures, such as the mortgage-to-rent scheme to aid vulnerable borrowers, the reimplementation of energy support measures, and various housing policies initiated after the draft budget submission.

Finally, on the topic of public debt, the Commission estimates a decline in Cyprus' public debt to 71.4% of GDP by the end of 2024. While this is above the Treaty's reference value of 60% of GDP, it marks a substantial improvement from the ratio at the end of 2021, demonstrating significant fiscal progress.