The Ministry of Finance is working feverishly for the preparation of the state budget for 2022, with the Minister of Finance Konstantinos Petridis staying with his statements to KYPE that the next months and 2022 will be crucial for ensuring the sustainability of public finances.
A date for the discussion of the state budget has not yet been set before the Council of Ministers, due to the planned visits of the President of the Republic abroad, but it is estimated that the discussion will take place by the third week of September at the latest. According to the Constitution, the budget is submitted to the Parliament by September 30th.
The Ministry of Finance and the competent Budget Directorate are already working feverishly in consultation with the other ministries and government departments for the preparation of the next budget and the medium-term financial framework, with technocrats of the Ministry of Finance setting the goal of reducing the 3% deficit in 2022 compared to the estimated 4.7% in 2021, as it remains the expansionary fiscal policy to mitigate the effects on the real economy and economic activity from the ongoing coronavirus pandemic.
The fiscal balance will remain negative for the second consecutive year, since the support policy due to the pandemic is maintained, with the Ministry of Finance, however, implementing a policy of phase out of support measures (phase out), with the aim of gradual return to balanced budgets.
In addition, the European Commission maintains – due to the pandemic – the Stability Pact escape clause in 2022, so Member States are not obliged to apply EU fiscal rules. The Stability Pact is expected to enter into force in the near future.
YPOIK: The coming months and 2022 are crucial for the sustainability of public finances
In statements to KYPE, Mr. Petridis stressed that the next state budget will have a development character while maintaining, albeit to a reduced and targeted degree, the expansionary fiscal policy.
Noting that the budget data so far has not improved satisfactorily, Mr. Petridis explained that it was the government's policy to maintain the expansionary fiscal policy, which was also non-recurring (one-off) due to the pandemic, but stressed that there should be a policy of phasing out expansionary policy in order to ensure the sustainability of public finances.
The Minister of Finance pointed out that ensuring the sustainability of public finances was what led to the upgrades of the Cypriot creditworthiness and allowed access to the markets, in order to create stocks to support the economy in the midst of the pandemic.
“Consequently, the coming months and 2022 will be crucial for the long-term sustainability of public finances,” he stressed.