**Cyprus Economy Resilient Despite Inflation Pressures, Says Finance Minister**
The Cypriot economy is demonstrating resilience in the face of external shocks, maintaining a satisfactory growth rate even as inflationary pressures persist, according to Finance Minister Makis Keravnos. His remarks came after presenting the semi-annual Fiscal Policy report during a cabinet session on Tuesday.
Keravnos highlighted that the economy grew by 3.3 percent in the first half of the year, significantly outpacing the European Union average. This growth is particularly notable given the backdrop of heightened geopolitical uncertainty and an ongoing energy crisis marked by rising global fuel prices.
"The Cypriot economy continues to grow at a satisfactory pace," Keravnos stated, emphasizing the government's commitment to sustaining this positive performance. He noted that the labor market remains robust, with the unemployment rate recorded at 4 percent during the same period.
However, inflation has seen a notable increase, rising from 0.5 percent in January to 3.1 percent by June. The government anticipates that inflation will stabilize around 4 percent by the end of the year. In response to these inflationary trends, the administration has introduced relief measures estimated to cost approximately €200 million.
When questioned about the potential extension of reduced fuel taxes, Keravnos refrained from providing a definitive answer, stating that the government is continuously assessing measures and will make decisions based on evolving circumstances. He reiterated that the European Union advises member states to implement targeted and temporary anti-inflationary measures.
The finance minister attributed the government's ability to fund relief efforts to a fiscal surplus, which has also contributed to reducing the national debt. He reported that the budget recorded a surplus of 1.1 percent of GDP during the first half of the year, with projections indicating an overall surplus of around €900 million for the entirety of 2026. This surplus is crucial for sustaining the government's social policies, which account for over €1 billion, or nearly 33 percent of the national budget.
Keravnos expressed confidence in the government's fiscal strategy, dismissing concerns over a potential decline in the surplus. "The goal is not to have surpluses for their own sake," he explained. "Surpluses are there for our needs, and mostly to repay the approximately €1 billion in debt a year."
Despite the positive indicators, Keravnos acknowledged the ongoing challenges posed by global crises and conflicts, emphasizing the need for continued prudent economic policies. He reaffirmed the administration's commitment to navigating these uncertainties while fostering economic growth and stability.
As Cyprus moves forward, the government's focus remains on balancing economic growth with the necessary measures to address inflation and support social welfare initiatives, ensuring a resilient economy in the face of external pressures.