Cyprus must prioritise fiscal discipline over populism, Finance Minister Makis Keraunos told Kathimerini Sunday, highlighting the resilience of the economy despite a challenging global environment. According to the Minister, positive evaluations and swift responses to recent challenges demonstrate the economy’s strength.
Keraunos identified the ongoing conflict in Iran as a major concern, warning of potential impacts on energy costs, tourism, and broader economic growth if hostilities persist. “We must maintain a responsible and strict economic policy. It is a time for fiscal discipline, not populism,” he said, stressing that overextending the economy could slow growth or trigger stagflation.
When asked if recently announced support measures are sufficient, he replied that outcomes depend on the intensity and duration of the conflict. At present, there is no need for additional measures until existing plans are implemented. Regarding potential fuel price caps, Keraunos argued that such caps are generally ineffective, noting the risk of service station closures or price increases to maintain profit margins.
Tourism
Addressing tourism concerns, he said the sector has not yet suffered major losses, despite some booking declines. “There is time to regain lost ground,” he noted, advising comparisons against a realistic baseline rather than last year’s record figures. Overall, he added, fiscal impact assessments currently show no cause for alarm. “The message is that Cyprus remains a safe destination with one of the strongest economies in Europe,” he said, citing early signs of recovery such as rising flight numbers.
Keraunos also discussed domestic tourism initiatives, noting that the Deputy Ministry of Tourism is preparing a plan for the current period, ready to implement it if the sector deems it useful.
On the matter of the GSI electricity interconnection amid high energy costs, he explained that updates to the project’s study are necessary due to technical and financial considerations. “Of the 27 EU member states, 25 are connected, but energy costs remain the EU’s biggest challenge, affecting competitiveness,” he said.
Regarding the foot-and-mouth disease outbreak, Keraunos said the livestock sector was poorly structured and that the crisis could serve as an opportunity for reform. He stressed that the economy has not been significantly affected beyond compensation costs, which total €28 million for the first package, and EU support has been requested.
On the management of the Social Insurance Fund, Keravnos said no Finance Minister wants to borrow from the the fund when cheaper borrowing options exist. He suggested reforms to establish an independent body responsible for pension security and investment returns.
Foreclosures and populism
Ahead of parliamentary elections, the Minister sent a warning to political parties and candidates: “Whenever we have been swayed by populism and inflated promises, we have entered dangerous paths, jeopardising economic sustainability and national stability.” He called for prudence, seriousness, and rational policymaking.
Regarding foreclosures, Keraunos said he does not see widespread repossession of primary residences. “We intervene daily to ensure oversight and coordination, especially with credit acquisition companies,” he said, adding that he is open to party proposals provided they do not breach constitutional norms or threaten fiscal stability. He emphasised the importance of passing government bills, which incorporate some party proposals.
Finally, addressing borrowers’ rights to suspend foreclosures pending court decisions, Keraunos noted that of 1,600 cases heard, only seven favoured the debtor. “Focusing solely on court suspension, which takes a long time, will not effectively help borrowers,” he said.