Cyprus’s General Government budget maintained a healthy surplus during the first ten months of 2025, but the overall fiscal position moderated compared to the previous year. Preliminary results from the Statistical Service of Cyprus (CYSTAT) show a surplus of €1,119 million, equivalent to 3.1% of GDP, for the January–October 2025 period. This represents a decrease from the €1,320.9 million surplus (3.8% of GDP) recorded in the corresponding 2024 period.
The reduction in the surplus is primarily due to a sharp acceleration in government spending, particularly on capital projects, which outpaced robust growth in revenue from income and social contributions.
Revenue Boosted by Income and Contributions
Total government revenue increased by 5.6%, adding €658.5 million to reach €12,332.5 million for the ten-month period. This growth was driven by two key areas:
-
Social Contributions: The largest absolute increase came from social contributions, which grew by 8.2% (an increase of €296.3 million) to €3,906.7 million.
-
Income & Wealth Taxes: Revenue from income and wealth taxes also rose significantly by 5.3% (an increase of €154.6 million) to €3,051 million.
-
Property Income & Sales: Property income saw a massive surge of 40.1%, while revenue from the sale of goods and services increased by 18.7%.
Interestingly, revenues from taxes on production and imports were nearly flat, increasing by a marginal 0.2%, with net VAT revenue actually declining by 0.9%.
Expenditure Rises Sharply Due to Capital Spending
Total government expenditure grew at a faster pace than revenue, rising 8.3% (an increase of €860.4 million) to reach €11,213.5 million.
The largest driver of this increased spending was the Capital Account, which saw a substantial 36% surge, amounting to €1,163.8 million. This significant investment included:
-
Gross Capital Formation: Up 12.3% to €822.3 million.
-
Other Capital Expenditure: Increased sharply by €217.9 million.
Other significant expenditure increases were recorded in core current spending:
-
Social Benefits: Increased by 7.1% (an increase of €299.7 million) to €4,532.8 million.
-
Compensation of Employees: Including wages and pensions for civil servants, this category rose by 6.7% (an increase of €201 million) to €3,204.3 million.
While current transfers and subsidies saw minor decreases, the overall acceleration of spending, particularly in capital projects, was the primary factor in reducing the overall fiscal surplus percentage year-on-year.
Source: Stockwatch.com.cy