Cyprus has started 2025 on a strong financial footing, posting a budget surplus of €580.6 million in Q1, which equals 1.6% of the country’s GDP, according to provisional data from the Statistical Service of Cyprus. This marks a slight bump from the same period last year, when the surplus stood at €575.7 million (1.7% of GDP).
What’s Boosting Government Revenue?
The biggest push came from social contributions, which surged by €110.4 million (10.5%) to reach €1.162 billion. There was also a solid increase in income and wealth tax revenues, up €70.7 million (7.7%) to €985.9 million.
Revenue from the sale of goods and services saw a notable jump of €63.2 million (29.1%), bringing the total to €280.5 million. Taxes on production and imports also rose slightly by €29 million (2.7%), landing at €1.101 billion. Within that, VAT collections remained almost flat, inching up by just €3.2 million (0.4%) to €731.6 million.
Declines in Certain Income Streams
Not all categories were in the green. The government recorded a steep drop in current transfers, down 40.5% (€47.9 million) to €70.4 million. Capital transfers also took a hit, falling by €9.2 million (78%) to just €2.6 million, while property income declined slightly by €1.7 million (8.1%) to €19.4 million.
Where Did the Money Go?
On the spending side, total expenditure reached €3.042 billion, marking a €209.5 million increase (7.4%) compared to Q1 2024.
The largest spending increase came in social benefits, which rose by €110.3 million (9.4%) to €1.288 billion. Public sector compensation—which includes salaries and pensions—also climbed by €57.1 million (6.4%), now totaling €954.6 million. Interest payments were slightly higher as well, reaching €72.9 million (up 1.7%).
On the investment side, capital expenditure jumped by €59.5 million (38.2%) to €215.4 million. That includes a €19.3 million rise in gross capital formation (13%), and a sharp increase in other capital outlays, which climbed from €7 million in Q1 2024 to €47.2 million this year.
Minor Cuts in Some Areas
A few spending categories saw reductions. Intermediate consumption dropped by €12.7 million (4.3%) to €282.4 million, current transfers fell slightly to €192.7 million (down €3.9 million or 2%), and subsidies declined by €2 million (5.2%) to €36.2 million.
Source: Stockwatch.com.cy