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Central Bank Governor Calls for Productivity-Boosting Investments

Published February 12, 2026, 12:30
Central Bank Governor Calls for Productivity-Boosting Investments

The Governor of the Central Bank of Cyprus, Christodoulos Patsalides, emphasized the need for targeted investments to enhance productivity and long-term growth in Cyprus, leveraging the country's favorable fiscal position. Thanks to GDP growth and fiscal surpluses, Cyprus has reduced its public debt, creating room for these investments. However, Mr. Patsalides warned that the country remains vulnerable to external shocks and requires adequate fiscal reserves. Speaking at the Conference of European Independent Fiscal Institutes (EUIFI), Mr. Patsalides referred to the challenges facing Europe, such as the succession of shocks and the ECB's interest rate hikes, which have led to increased debt and limited fiscal space. He warned that the need for investment in defense, technology, and the green transition, combined with strained public finances, could lead to a re-pricing of state risks. The Governor of the CBC stressed that fiscal policy should prioritize investments and spending that enhance competitiveness and productivity, while ensuring the sustainability of public finances. He also highlighted the importance of the new European framework for economic governance, which allows for an extension of fiscal adjustment subject to the implementation of reforms and investments. Finally, Mr. Patsalides emphasized that fiscal discipline alone is not enough and that a balance is needed between maintaining reserves and promoting productive investments to avoid "fiscal stagnation". He also highlighted the role of Fiscal Councils in strengthening transparency and accountability in fiscal planning.

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