Cyprus’ public debt is expected to fall to around 50% of GDP by the end of the year, marking one of the biggest reductions in the European Union, Finance Minister Makis Keravnos said on Wednesday, while expressing confidence that the country could cope with the economic impact of regional instability.
Speaking at the 16th Nicosia Economic Congress, Keravnos said the impact on the Cypriot economy from the conflict involving Iran would depend on the intensity and duration of the fighting. He warned of an energy crisis, risks to tourism and disruption to transport, with higher costs likely to spread across the wider economy and society. He also expressed hope that a newly announced draft agreement would be finalised and followed by a return to normality.
Keravnos said the Cypriot economy maintained a steady growth path in recent years, with growth reaching 3.8% in 2025, alongside low inflation and conditions of full employment. These figures, he added, confirmed the economy’s resilience at a time of heightened geopolitical uncertainty and volatility in international markets.
According to the Finance Minister the government’s economic policy was based on three pillars: resilience, sustainable growth and social cohesion. He added that the administration was supporting vulnerable households facing the high cost of living, strengthening the middle class and promoting policies aimed at creating quality jobs.
Keravnos pointed out that competitiveness was a key priority both for Cyprus’ EU Council Presidency and for the government’s broader economic strategy. He referred to efforts to reduce bureaucracy, advance the digital and green transition, improve skills and lower energy costs through a more diversified energy mix and greater use of renewable energy.
He said reforms and investment under the Recovery and Resilience Plan had strengthened key sectors of the economy and created conditions for optimism in the coming years. He added that all major credit rating agencies had restored Cyprus to investment-grade A status for the first time since 2011, reflecting what he described as a broader reform effort.
Among the government’s medium-term priorities, he highlighted tackling the cost of living, preparing a new short-term growth programme ahead of the completion of the Recovery and Resilience Plan in August 2026, and supporting sustainable growth in key sectors of the economy.
He also stressed the importance of foreign investment, saying it helped boost productivity, create jobs and attract highly skilled talent, while reaffirming the government’s commitment to fiscal discipline and reform.
CNA/MH/HT/EPH/2026
ENDS, CYPRUS NEWS AGENCY
