Proper planning of government spending is critical, since it must activate additional private resources and boost productivity, says economist Tasos Yasemidis, asked to comment on the 2026 budget, which is headed for a vote in the House of Representatives.
On the positive side of the 2026 budget?
This shows surpluses, while the positive rhythms of the economy continue and the public debt of Cyprus follows a downward trend.
About the challenges this year's budget is called upon to manage?
I underline the high percentage of inflexible expenses, such as the state payroll, which can limit the Government's reaction margins in times of recession. On the other hand, however, the increase in wages and spending in the public sector can boost consumption, and therefore public revenues through indirect taxation.
So proper planning?
Proper planning of government spending is critical, as it must activate additional private resources and boost productivity. For this reason, the allocation of funds is the subject of intense political and social debates every year.
In addition, he stated that the release of funds included in the European Union's Recovery and Resilience Plan is subject to certain prerequisites being met. "This shows that government spending is not just an accounting quantity, but is linked to strategic choices, which determine the course of the country.
What is our financial strategy?
The drawing up and passing of a state budget is a key moment in the functioning of a state, since it records not only the economic strategy of each government, but also the priorities it sets for society. The budget is the document that captures the philosophy of governance, as it includes the estimates for revenues, expenditures and the general objectives that make up the fiscal policy.
