Debate on Cyprus` state budget 2021 begins on Monday in the Parliamentary Committee on Finance. Minister of Finance Constantinos Petrides will brief MPs on the course of public finances, during a particularly difficult period due to the challenges of the COVID-19 pandemic, but also amid controversy after the revelations about the Cyprus Investment Program.
The Minister will analyse state revenues, fiscal indicators, economic policy and fiscal situation in Cyprus. The budgets of the Ministry of Finance, the Treasury of the Republic, the Directorate General for European Programmes, Coordination and Development as well as public debt management will also be discussed.
As the Minister of Finance has said, the budget for 2021 will be increased compared to last year by 609 million euros or 8.7%, as the government seeks to enhance the budget`s social dimension, including emergency measures in 2021 to support vulnerable groups, employees and companies, but also to strengthen its growth aspect. This, as he said, is an “emergency” budget.
According to the presentation of state budget for 2021, the Ministry of Finance forecasts a budget deficit for the period 2020-23 and an increase in public debt as a percentage of GDP in 2020, due to the new economic conditions.
The government budget for 2021 predicts revenues of €8,861,318,757 and primary expenditures (excluding loan repayments and interest expenses) of €7,609,847,339, with the primary balance amounting to €1,251,471,418.
According to the data of the Ministry of Finance, the budget of 2021 and the Medium – Term Fiscal Framework (MTF) 2021-2023 were prepared under very difficult conditions. The COVID-19 pandemic crisis inevitably affected fiscal data not only in Cyprus but also worldwide, it is noted.
The Ministry points out that due to the fact that public debt as a percentage of GDP, remains high, it becomes absolutely necessary to maintain the ceilings as finally formulated in the 2021 budget bill and the 2021-2023 MTF.
In the three year period of 2021-2023, an amount of €3,200 million is expected to be spent on development projects, €4,907.4 million on social benefits, €240 million on e-government projects and €565.4 million is allocated for business support (implementation of projects).
The main categories of expenditure in the 2021 budget concern, among other things, personnel expenditure of €2,946 million (27.9%), operating expenditure of €896 million (8.5%), transfers of 2,982 million (28, 2%) and loans amounting to €2,426 million (23%).