On Thursday, Cyprus' state budget for 2024, along with the Medium-Term Fiscal Framework spanning 2024-2026, was tabled in the Plenary of the House of Representatives. This signals the start of deliberations, with the goal of ratification by year-end.

• Surplus and Revenue: The budget highlights a fiscal surplus of 2.2% of GDP and a primary surplus of 3.6% of GDP. It projects revenues at €9,892 million, indicating a 9.6% hike from the previous year.

• Expenditures: Excluding loan repayments and investments, expenses are set to grow by 17.7%, culminating at €10,584 million. Inclusive of loan reimbursements, interest, and investments, the overall outlay stands at €13,040.7 million, distributed as:

  • Fixed Fund: €4,340.8 million

  • Regular: €7,221.1 million

  • Development: €1,478.8 million, a 14.2% rise from 2023's €1,295.051 million.

• Revenue Sources: Taxes dominate, contributing about 81% to total revenue. Direct tax earnings are predicted to surge by 5.7%, while indirect taxes could see a 7.4% rise. Non-tax revenues like goods and services sales, rents, and transfers/grants are forecasted to swell by 24.5%.

• Expense Breakdown: Personnel costs, inclusive of pensions and grants, lead the surge with around 14%—attributed mainly to augmented nominal benefits and payouts to insurance funds. Operational costs may climb by about 7% to €1,168.4 million. Transfers could jump by 16% to €3,709.7 million, with significant additions directed towards the Social Insurance Fund, National Health System, government bodies, and local authorities.

Of note, public debt service costs are poised to surge dramatically by 68.5% to €3,379.2 million.

• Growth: GDP is predicted to grow by 2.9% in 2024, reaching €30,417.9 million from 2023's €28,876.4 million. Future growth is estimated at 3.1% and 3.2% for 2025 and 2026, respectively.

• Employment & Inflation: The unemployment rate could recede from 6.5% in 2023 to 5.8% in 2024. Meanwhile, inflation is anticipated to moderate from 3.5% to 2.5% in 2024, stabilizing at 2% for the subsequent two years.

• Financial Metrics: The fiscal balance, relative to GDP, might rise from 1.9% to 2.2% in 2024. Capital outlays are foreseen to drop from 3% of GDP to 2.8%. Public debt, as a GDP percentage, is on track for a reduction, potentially hitting 72.9% in 2024 from 80.9% in 2023, with further declines in 2025 and 2026. External public debt could also shrink from 75.5% of GDP in 2023 to 69.0% in 2024. General Government revenue and expenses are projected at €13,166.2 million and €12,506.8 million for 2024, respectively.

Conclusively, the fiscal surplus might scale from €557.4 million in 2023 to €659.4 million in 2024, representing 2.2% of the GDP.