The economic indicators of the Cypriot economy may be flying, but the hole in the Vasilikos terminal project, work on which was terminated a few months ago and a compensation claim procedure is underway at the Court of Arbitration, may land it abruptly.

This is because the state may be asked to put up to €500 to €600 million out of its own pocket. to pay the broken!

According to information provided by "F", yesterday Finance Minister Makis Keravnos met with representatives of the opposition parties DIKO, EDEK and DEPA, whom he briefed on the 2025 budget, the estimates, forecasts, expenditures and fiscal risks that the economy may face.

Despite the positive pace of the economy and the rise in economic indicators, the worrying developments at the Vasilikos terminal are hoarse for the government's economic staff. According to "F" information, the additional expenses that will arise for the Republic from the Vasilikos project, as analyzed yesterday by the Minister of Finance to party officials, are the following:

  • By the end of the month, the Republic will have to return to the European Investment Bank and/or the European Bank for Reconstruction and Development a total amount of €220 to €230 million. This is money borrowed by ETYFA (a subsidiary of DEFA) for the implementation of the project, with the Republic as guarantor! After the project collapsed, the European bank requested, Keravnos said, the repayment of the loan by the end of the month.
  • The European Commission has demanded from the Cypriot authorities the reimbursement of €73 million, which it gave to the country as a grant (out of a total of €101 million) for the construction of the project.
  • It is estimated that another €230 million will be needed for the completion of the works on land at Vasilikos (pier and other infrastructure), as well as for other pending issues with the consortium.
  • The additional costs that may arise for the state are estimated to range between €500 and €600 million. This poses a serious fiscal risk to the Cypriot economy. The state has a reserve to cover the additional expenditures through the surplus, which in the first seven months of the year doubled to €702.5 million. or 2.2% of GDP, compared to the previous year. It will therefore use the cushion to cover the damage from the scandalous development at the terminal, instead of social policy or financing other decisions to strengthen the economy. The Ministry of Finance is on standby, monitoring developments, while proceeding with various scenarios to address the situation.
  • Regarding the electricity interconnection between Crete and Cyprus, the competent minister informed the representatives of the parties that the budgets for five years will include an annual budget of €25 million to finance the expenses of the implementing body.

4.9% increase in expenditure

Regarding the budget for 2025, it is expected to be put to the Council of Ministers next Friday. Makis Keravnos informed the parties that, due to the good state of the Cypriot economy, the European Union allowed the Republic for the next four years to increase spending by an average of 4.9%. However, according to information, this advantage may be affected in the coming years, depending on developments with the terminal in Vasilikos.

In relation to the fiscal surplus, in 2025 it will be 3.3% and the primary surplus will reach 4.9%. Also, the growth rate will hover around 4%, inflation will be 2% and unemployment at 5%. As far as public debt is concerned, this year ends with 72.5%, in 2025 public debt is estimated to be 64% and in 2026 it will fall to 58%.