The budget foresees increased revenues and expenditure for both the general government and the central government, reflecting continued economic growth alongside fiscal adjustments.
Overall Budget Framework For 2026
According to the budget submitted to the House, both revenues and expenditures are projected to rise in 2026.
For the general government, projected revenues amount to €16.488 billion, marking an increase of 4.5% compared with 2025, while projected expenditures reach €15.361 billion, up 5.3% year on year.
Central Government Revenues And Expenditure
For the central government, the 2026 budget forecasts revenues, excluding financial flows, of €10.784 billion, representing an 11.1% increase compared with the revised 2025 revenues of €9.709 billion.
Expenditure, excluding loan repayments and investments, is estimated at €11.365 billion, an increase of 2.8% compared with €11.058 billion in 2025.
Expenditure Requiring Parliamentary Approval
According to the budget analysis, total regular and development expenditure requiring parliamentary approval, excluding spending from the Fixed Fund, amounts to €9.963 billion.
Total expenditure provided for in the 2026 budget reaches €13.719 billion, including €3.755 billion in Fixed Fund expenditure, which does not require legislative approval.
Finance Ministry Submits 61 Budget Amendments
The Minister of Finance has submitted 61 government amendments to the House of Representatives, aiming to incorporate them into the final version of the 2026 budget.
The amendments were deemed necessary following Cabinet approval and the submission of the budget to Parliament, in order to increase, reduce or transfer appropriations and regulate various issues, including staffing matters, to ensure the smooth functioning of the public service.
It is clarified that the proposed amendments do not affect the overall expenditure ceilings of either the 2026 budget or the Medium-Term Fiscal Framework 2026–2028.
Amendments On Civil Defence Put On Hold
During the review process, the House Finance and Budget Committee decided not to approve amendments related to the establishment and operation of the General Directorate of Civil Defence within the Ministry of Interior.
The committee ruled that the relevant legislative framework must first be submitted and approved, noting that no such bills have yet been tabled before Parliament.
Finance Committee Assessment Of The Economy
The Finance Committee notes that, despite international uncertainty and geopolitical developments, the Cypriot economy is expected to remain on a growth path, with a slight slowdown in 2025 and lower but positive growth rates over the following three years.
The committee highlights that the general government fiscal balance remains in surplus, albeit reduced compared with 2024, while surpluses are also forecast for the 2026–2028 period, albeit on a downward trajectory.
Public Debt, Inflation And Employment Outlook
The committee positively assesses the trajectory of public debt, which is expected to decline significantly in 2025 and continue falling during 2026–2028, with projections placing it below 60% of GDP within 2025.
Inflation is expected to ease substantially this year and stabilise around 2% between 2026 and 2028. Unemployment is forecast to decline marginally and stabilise near 4.5%, with the labour market approaching conditions of near full employment.
On social indicators, a slight reduction is recorded in the risk of poverty or social exclusion, alongside a modest deterioration in income inequality indicators.
Political Positions Within The Finance Committee
At a political level, all committee members acknowledge the uncertain international environment and associated risks. The majority express satisfaction with economic performance to date, citing positive growth, fiscal stability, declining public debt and near full employment.
At the same time, the committee stresses the need for prudent management of public spending, restraint in the state wage bill and increased defence expenditure.
Other members voice concerns over the cost of living, housing affordability and electricity prices, calling for enhanced social benefits and targeted support measures for vulnerable groups and household purchasing power. Criticism is also raised that the budget prioritises fiscal surpluses over addressing social deficits and high living costs.
Party Positions On The 2026 Budget
DISY states that the Cypriot economy remains in good condition, with strong growth dynamics, low unemployment and improving key indicators, attributing this performance to prudent fiscal policy since 2013.
While welcoming the reduction in public debt and credit rating upgrades, the party criticises the government for a lack of major new investments, delays in critical projects and hesitation on reforms. It warns that the full reinstatement of COLA and the expansion of the public sector wage bill pose risks to medium-term fiscal stability, calling for targeted social policy and defence spending of 3% of GDP.
AKEL acknowledges positive macroeconomic indicators but argues that inequalities are widening beneath the surface and structural weaknesses persist. It describes the development model as fragile and lacking a decisive shift towards productive investment, innovation and green and digital transition.
The party characterises the 2026 budget as managerial, producing surpluses without social impact and featuring regressive taxation. It argues that the cost of living, housing crisis and energy poverty are inadequately addressed and states it will vote against the budget.
DIKO considers that the 2026 budget consolidates economic stability in an unstable international environment, highlighting fiscal surpluses, declining public debt and positive prospects for growth and employment.
It notes Cyprus’ resilience and comparatively stronger performance than the EU average, welcoming social spending and tax reform, while flagging risks related to housing, healthcare and economic competitiveness.
ELAM places job creation through state initiatives and investments at the centre of its priorities, strongly criticising the banking sector and policies it claims favour banks over borrowers.
It calls for strengthening the welfare state, supporting vulnerable groups, boosting primary and secondary production and enhancing defence capacity, while opposing spending related to the management of irregular migration.
EDEK assesses that the 2026 budget contributes to macroeconomic stability and public debt reduction but warns against complacency.
The party calls for a shift in the development model towards innovation, primary and secondary sectors, green growth and a more human-centred economic policy. It also urges deep reforms in housing policy, taxation, the banking sector and the General Healthcare System, aiming to reinforce social cohesion and long-term sustainability.