IMF expects marginal fiscal surplus in 2016, 0.7% surplus in 2017

The International Monetary Fund said that Cyprus’s government will generate a fiscal surplus of 0.1 per cent of the economy this year, after generating a 1.7 per cent budget shortfall in 2015, which excludes the recapitalisation of the cooperative banking sector with €175m in December.

In 2017, Cyprus is projected to post a fiscal surplus of 0.7 per cent of economic outlook and twice as much in 2018, the IMF said in a Fiscal Monitor report on its website.

The IMF, which participated in and supervised Cyprus’s bailout together with European Union institutions by making available €1bn in funds, said that the government will generate this year a primary surplus of 2.6 per cent of the economy, compared to 1.4 per cent in 2015. In 2017, the Cypriot government is projected to see its primary deficit rise to 3 per cent and to 3.6 per cent in 2018.

The IMF said on Tuesday that the Cypriot economy is projected to grow 1.6 per cent in 2016, effectively at the same growth rate as in 2015, before growth accelerates to 2 per cent in 2017.

In 2016, the government’s revenue as a percentage of gross domestic product is projected to drop to 38.9 per cent from 39.6 per cent the year before and fall to 38.6 per cent in 2017, the IMF said. The ratio of government expenditure to economic output is projected to drop to 38.8 per cent this year from 41.2 per cent in 2015 and further drop to 37.9 per cent next year.

Public debt, which peaked at 108.7 per cent of GDP last year, is projected to drop to 99.3 per cent in 2016 and to 95.3 per cent following year, the IMF said.