The International Monetary Fund (IMF) has revised its fiscal projections for Cyprus, forecasting smaller budget surpluses in the coming years while upgrading its estimates for economic growth, inflation, and unemployment. The Cypriot government welcomed the findings, saying they confirm the country’s steady economic trajectory and resilience.
Surplus revised down
In its October Fiscal Monitor report, the IMF now expects Cyprus to record a fiscal surplus of 3.4% of GDP in 2025, down from its previous April forecast of 3.8%. For 2026, the surplus is projected at 3.2%, a slight downward revision from 3.5%.
Similarly, the primary surplus excluding debt servicing costs, is estimated at 4.7% of GDP in 2025 and 4.4% in 2026, both revised down from April’s forecasts of 5.2% and 4.8% respectively. Despite these adjustments, Cyprus’ budgetary outlook remains strong, with the IMF projecting the surplus to gradually decline to 1.6% by 2030, maintaining a positive fiscal trajectory throughout the decade.
Public debt on a declining path
Encouragingly, the IMF anticipates a sharper decline in public debt. For 2025, debt is forecast to fall to 57.7% of GDP (down from April’s 60.3% estimate), and to 53.7% in 2026 (previously 55%). By 2030, the debt-to-GDP ratio is expected to drop further to just 38.3%, reflecting sustained fiscal discipline and economic growth.
The IMF’s World Economic Outlook, also released this week, presents a more optimistic view of Cyprus’ economic growth prospects. The Fund now estimates that GDP growth will reach 2.9% in 2025 and 2.8% in 2026, an upgrade from its April projections of 2.5% and 2.7% respectively.
Growth is expected to average 2.9% over the 2025–2028 period, signalling continued momentum in the Cypriot economy despite broader global headwinds.
Keravnos: IMF estimates confirm our economic strategy
Finance Minister Makis Keravnos, welcomed the IMF's updated forecasts, stating they validate the government's own projections and reflect the country’s stable macroeconomic environment.
Speaking after a Council of Ministers meeting at the Presidential Palace on Wednesday, Keravnos emphasised that the IMF’s assessments are “always much more conservative, even than our own conservative estimates,” making their optimism about Cyprus particularly noteworthy.
He noted that while the IMF expects global growth to decelerate from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026, Cyprus stands out with improved growth projections.
“The IMF presents improved estimates for our economy, with growth expected to average 2.9% throughout 2025 to 2028,” said Keravnos. “Inflation is also expected to decrease to 0.7% in 2025, consistent with our forecast, and to rise modestly to 1.3% in 2026.”
On the labour market, the Minister pointed to IMF forecasts that place unemployment at 4.5%, while the country’s fiscal balance is expected to maintain a healthy surplus of around 3% of GDP on average through 2028.
Keravnos concluded that the IMF’s projections “confirm our estimates and the continued, good growth trajectory and resilience of Cyprus’ economy.”
Additional reporting from CNA