The 2027 budget

Every September the government sends Parliament a budget for the next year. The House Finance Committee goes through it ministry by ministry from 12 October to mid-November, and the House votes in December. Until then it is a bill, and it can change.

The headline figure, €14.4 billion, includes €2.5 billion of loans being repaid and lent and €711 million of interest. Three numbers, one budget explains why the same budget is quoted as three different totals. This page uses the one that leaves debt out: what the ministries themselves will spend.

What the numbers say

Spending. The ministries are given €11.16 billion, €470 million more than the €10.69 billion voted for 2026. Defence takes €267 million of the increase, more than half: the Ministry of Defence rises to €895 million, mostly on the chapter called defence strengthening; Defence, the fastest-growing line has the detail. Education gains €89 million, Health €48 million and Transport €47 million. Energy loses €37 million and Research €22 million.

Pay for public employees is hardly up on paper, 0.4%, because a retroactive payment into the civil servants' pension scheme, €127 million in 2025 and €110 million in 2026, falls to €7 million. Salaries themselves rise 3.9%. The number of posts falls by 51, the third year of reduction.

Revenue.

The bill expects €9.34 billion in taxes. VAT is the largest source at €3.56 billion, then corporation tax at €2.46 billion, up from €1.99 billion collected in 2025 after the rate rose to 15%. Income tax on people is expected to bring in €1.22 billion and the defence contribution €357 million. Grants, almost all from EU funds, fall from €984 million budgeted for 2026 to €288 million; the memorandum links the parallel fall in EU co-financed spending to the end of the Recovery and Resilience Plan's actions in 2026.

The balance. On the government's own European measure, which counts the whole state, it expects a surplus of €1.6 billion in 2027, 3.9% of the economy, and public debt falling to 45.2% of the economy from 55.0% at the end of 2025. The state budget on its own, counted in cash and without borrowing, spends about €1 billion more than it takes in, partly because it records €769 million in 2027 as the state's contribution to the Social Insurance Fund, up from €689 million in 2025, and pays interest on the fund's reserves. Two pots, not one explains how both can be true.

What it means for you

The bill contains no new change to income tax; the Ministry of Finance's April forecast shows no further effect of the 2026 reform in 2027. The things in it that reach households directly are smaller:

• Cost of living: €16 million to keep subsidising electricity prices and €50 million for the National Solidarity Fund.
• Housing: €99 million in housing benefits, slightly less than the €101 million of 2026, a named €20 million line for regeneration schemes in mountain, border and rural areas and old Nicosia, and €35 million for housing loan schemes.
• Water: €168 million to buy water, 18% more than in 2026; Water and the budget explains why.
• Public employees: the cost-of-living allowance on public pay is set at 12.70% for the first half of 2027 and 17.21% for the second.

A separate package approved by the Council of Ministers on 30 September is not in the bill. It includes zero VAT on bread, milk and other basic foods until the end of May 2027 and a cut in the duty on heating oil. The Finance Minister put the cost of the new measures at €70 million, and about €160 million with the measures already in force; Your electricity and water bill has the parts that reach household bills.

What people argue

Is it a good use of the surplus? The Finance Minister called it "a balanced and people-centred budget", with a surplus for the third year running. The Fiscal Council, in its interim report of 24 September, said any room created by surpluses should go to productive investment and targeted help, not to pay or permanent benefits for everyone, and warned that discipline matters especially in periods of electoral pressure. Its opinion on the bill itself had not been published by 3 October.

Defence and an EU loan. The chapter called defence strengthening grows by €253 million in a year. The state has been approved for an EU loan of up to €1.18 billion for defence and budgets €250 million a year of borrowing from the European Commission in 2027 to 2029. The budget does not say which spending the loan pays for. What the defence strengthening chapter buys is not published either: its breakdown goes only to the House Defence Committee, which must approve spending from it.

What is missing. We found no line of its own in the bill for the pension reform. The Labour Minister said its cost was taken into account and, as reported by RIK and the Cyprus News Agency on 21 September, put it at €820 million over six years; the Fiscal Council has asked for a full official costing. DISY, AKEL and ELAM each called the cost-of-living package a step in the right direction that did not go far enough, as reported by Alphanews.

How we know

All budget figures are from the 2027 budget bill and its explanatory memorandum, tabled on 24 September 2026: the summary of spending by ministry, Table 2A for revenue, Table 3 for spending by type and Table 1A for the government's projection for the whole state. They are on a cash basis and cover the state budget only, except the surplus and debt projection, which follows the European system of accounts. Comparisons are with the budget voted for 2026 and with the outturn for 2025.

The state budget's cash gap without borrowing is our own arithmetic on Tables 2A and 3; the memorandum does not print it. The Fiscal Council's points are from its Interim Report 2026. The contents and cost of the 30 September package are from the Ministry of Finance's announcement and the Finance Minister's statement of that day. The cost of the pension reform and the parties' reactions are as reported in the press. The Finance Committee's timetable is as reported by Politis on 28 September, and the December vote as stated by the House President.

The bill can still change. We will update this page when Parliament votes.