FinMin: IMF estimates for Cypriot economy improved

The Ministry of Finance welcomed, in a press release on Wednesday, the new estimates for Cyprus by the International Monetary Fund (IMF) as part of the World Economic Outlook (WEO).

According to the IMF estimates, the growth rate for 2024 is projected at 2.7% and for 2025 at 2.9%. The forecast for 2024 remains the same as the previous IMF projection (WEO October 2023). Significant improvement is seen in unemployment, which is predicted to decrease to 5.9% and 5.7% for 2024 and 2025, respectively, lower by approximately 0.5 percentage points from previous IMF forecasts. The inflation forecast stands at 2.3% and 2.0% for the years 2024 and 2025, respectively, with increases being lower by 0.1-0.2 percentage points, respectively, compared to previous IMF projections.

“These estimates are better than previous ones and fairly close to those of the Ministry of Finance, recognizing the resilience and prospects of the Cypriot economy as stated by the head of the IMF mission after the completion of consultations in March 2024, within the framework of the IMF’s Article IV assessment,” the Ministry of Finance said.

The Ministry also noted that “positive developments in the economy, despite challenges and uncertainties, demonstrate the resilience of the Cypriot economy to external fluctuations, based on healthy financial indicators and the strong performance of the economy, especially in the tourism and other service sectors.”

“However, uncertainty surrounding macroeconomic prospects remain high due to the difficult external environment stemming from the ongoing Russia-Ukraine conflict and the war in Israel and the Gaza Strip, which still persists and risks escalating into a broader conflict in the Middle East,” it added.

Finally, the Ministry of Finance noted that, as it is currently impossible to predict the duration of the conflict and its potential escalation, the risks to the Cypriot economy cannot be quantified.

Debt reduction amid geopolitical tensions is very positive

Minister of Finance Makis Keravnos welcomed the IMF Fiscal Monitor’s projections that Cyprus will reduce its public debt-to-GDP ratio to the Maastricht Treaty level of 60% sooner than anticipated, stating that this is a very positive development.

On Wednesday the IMF issued its April 2023 Fiscal Monitor projecting the reductio of Cyprus debt to GDP ratio to the 60% level, in 2026 a year earlier than its previous forecast.

The IMF’s projection, Keravnos said speaking to the press, “reaffirms the sound course of our economy and that Cyprus will reduce its public debt even faster.”

“This is a very positive development in a period marked by geopolitical tensions, which of course the FinMin is monitoring closely and we all hope there will not be any further complications,” the Minister concluded.




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