The Republic of Cyprus concluded 2025 with a strong financial performance, posting a fiscal surplus of €1,241.5 million, equivalent to 3.4% of its GDP. The data, released Wednesday by the Cyprus Statistical Service (Cystat), has been audited and verified under the European Commission’s Excessive Deficit Procedure.
The report also highlights a significant reduction in the relative weight of the national debt, which stood at €20,078.2 million, representing 55% of the GDP—a key indicator of the country’s strengthening economic stability.
Revenue Growth: Strong Gains in Income and Transfers
Total government revenue reached €15,921.7 million in 2025, marking a healthy 7.9% increase (€1,171.4 million) compared to the previous year.
Key Drivers of Income:
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Social Contributions: Led the gains with an 8.5% increase, totaling €4,905.4 million.
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Income & Wealth Taxes: Grew by 10% to reach €4,183.8 million, reflecting a more active economy and higher earnings.
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Service Sales & Property Income: Revenue from the sale of goods and services surged by 20.5%, while property income receivable jumped by 30.1%.
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VAT Performance: Interestingly, net VAT revenue saw a marginal dip of 0.5%, settling at €3,153.6 million.
Expenditure: A Shift Toward Strategic Investment
Government spending also saw an upward trend, rising by 10.3% to a total of €14,680.2 million. However, the structure of this spending indicates a pivot toward long-term development.
Expenditure Highlights:
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Capital Investments: The standout figure was a 45.1% surge in capital expenditure, totaling €1,749.5 million, as the state prioritized infrastructure and gross capital formation.
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Social Transfers: Increased by €355.7 million (6.7%), reaching €5,659.4 million, to support the national welfare system.
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Public Sector Payroll: Compensation for employees rose by 7.3% to €4,160.7 million.
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Debt Servicing: In a positive move for the budget, property income payable (interest on debt) decreased by 4%, saving the state €17.2 million.
A Leaner, More Efficient State
The data reflects a government that is successfully balancing increased social and payroll costs with significant infrastructure investment, all while maintaining a healthy surplus. The reduction in subsidies (-14.4%) and the decrease in interest payments suggest a more streamlined approach to fiscal management as Cyprus continues to outperform its Eurozone peers in debt reduction.
Source: Stockwatch.com.cy