Nicosia – The Cyprus economy is expected to grow by 2,2% in 2016 and record a stable GDP growth of 2,5% until 2019, the government’s 2017-2019 Fiscal Policy Framework (FPF) projects.

The FPF was approved late last week by the Cabinet, marking the commencement of the process to compile the 2017 state budget.

The projections of the FPF are perfectly feasible, Finance Minister, Harris Georgiades, told the press after the Cabinet meeting, citing Eurostat’s announcement that the economy of Cyprus grew by 2,7% in the first quarter of 2016.

“The real economy is recovering, the efforts and sacrifices of the citizens yield results and we should certainly continue our efforts and consolidate this positive perspective” he noted, adding that the indices of investments and consumption have recorded a significant increase.

Georgiades said the expenditure for 2017 is forecast at €6.105 ml, increased by €100 ml.

The Minister of Finance announced that the decision to abolish the special contribution imposed on the public and private sector employees since 2011 until the end of 2016 has been finalised. “It is a final decision, a major relief of €80 ml”.

“Taxes are being reduced and costs are rising in a rational manner, without deviating in any way from the target for a balanced budget. What enables us to maintain a balanced budget, while reducing taxes and increasing revenue in a targeted way, is the fact that the economy is now growing and public revenue is supported through growth in a way that allows us to return to the households and the workers all the margins that are created,” the Minister elaborated.

He also noted that the public debt is declining, which will in turn contribute to the upgrading of Cyprus’ creditworthiness.

The public debt is continuously and gradually being repaid, Georgiades noted. “The public debt is in all respects manageable on a basic and obvious condition: that we will not return to the old [practices] with budget deficits that burden the economy with debt load and eventually burden the households and the businesses”.

Meanwhile, earlier this week, the European Bank for Reconstruction and Development (EBRD) announced that Cyprus can expect a GDP growth of 1,7% in 2016 and 2% in 2017.

In its projections on the countries in which it is active, the EBRD said that after five years of continuous contraction, it expects moderate growth ranging from 0.5% in 2015, to 1.4% in 2016 and 2.5% in 2017.