In an in-depth interview with Brief, Cyprus Finance Minister Makis Keravnos outlined the government’s priorities for the 2026 state budget and broader economic policy, emphasizing fiscal discipline, targeted social support, and long-term sustainability.

Keravnos described the upcoming budget as anchored in fiscal discipline, social sensitivity, and strategic development. Key investments will focus on the green and digital transition, strengthening welfare systems—particularly in health and education—and modernizing infrastructure to enhance economic competitiveness.

The minister stressed alignment with EU fiscal rules, aiming for a primary surplus and gradual debt reduction, which he called “strategic for market confidence.”

The long-awaited tax reform is moving forward, with legislation expected to be tabled by the end of 2025. Keravnos promised no across-the-board tax increases, but rather a fairer distribution of tax burdens, greater digitization, and a clampdown on evasion. “We aim for a simpler and more transparent system that benefits both households and businesses,” he said.

On the controversial issue of taxing non-profit associations, particularly sports clubs, Keravnos said the goal is to balance transparency and fairness. Genuine grassroots organizations will not be burdened, but those operating with commercial features must contribute fairly.

Acknowledging rising pressure on households from past interest rate hikes, Keravnos urged banks to demonstrate social responsibility through loan restructuring and relief for vulnerable borrowers. He also pressed for more equitable deposit rates, noting growing dissatisfaction among savers.

He welcomed the entry of Greek banks into Cyprus, calling it “a vote of confidence” and an opportunity to strengthen competition, provided regulatory standards are upheld.

Keravnos described the national health system (GeSY) as a major achievement but warned that without operational autonomy for public hospitals, its sustainability is at risk. He called for urgent reform in management and resource efficiency in cooperation with the Health Ministry and the State Health Services Organisation (OKYPY).

Despite past setbacks, Keravnos said the government is now pursuing a new energy roadmap focused on security and reducing reliance on fossil fuels. However, he cautioned against overambitious spending: “We must invest where our resources allow—without compromising fiscal stability or the next generation’s future.”

Keravnos reaffirmed the government’s pledge to compensate depositors affected by the 2013 banking crisis. A targeted compensation scheme will begin in the first half of 2026, focusing on lower-income individuals. “It’s not a handout—it’s a matter of justice and restoring trust,” he said.

On the hot-button issue of the automatic wage indexation (ATA), Keravnos rejected full reinstatement without reform, calling it fiscally dangerous and socially distorting. “We believe in protecting purchasing power, but not through unchecked wage inflation,” he said, advocating instead for consensus and balance.

Looking ahead, Keravnos envisions a Cyprus that is sustainable, fair, and globally competitive—a place of opportunity for youth, innovation, and environmentally conscious growth. “The economic model is not just numbers—it’s a mirror of society. And we must be able to look into that mirror with honesty,” he concluded.