A new report from the Treasury of the Republic of Cyprus reveals a diverging fiscal landscape for the first 11 months of 2025. While actual tax collections have seen a healthy boost, the overall “implementation” of the state revenue budget has slowed compared to last year—primarily due to a significant reduction in government borrowing. Conversely, state spending is moving at a slightly faster pace than in 2024, driven by increased social transfers and subsidies.
According to the Treasury’s State Budget Implementation Report, which tracks the period from January 1 to November 30, 2025, the state has realized 73% of its projected revenue, a drop from the 82% recorded during the same period in 2024.
Revenue Dynamics: A Tale of Two Streams
The headline “decrease” in revenue implementation is somewhat deceptive. While the percentage of the budget met is lower, this is almost entirely due to a €1.05 billion reduction in loan withdrawals. When looking at the “earning” power of the state, the picture is much brighter:
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Direct Taxes: Rose by €0.17 billion (6%), fueled by a €0.13 billion increase in corporate and personal income tax.
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Indirect Taxes: Increased by €0.14 billion (4%), with VAT contributions leading the way at €2.92 billion.
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Borrowing Slump: By the end of November, loan withdrawals stood at just €0.09 billion, compared to a massive €1.14 billion in the previous year.
Expenditure: Social Spending on the Rise
Total state spending reached €9.59 billion by the end of November, representing a 74% implementation rate. This is slightly higher than the 71% pace seen in 2024.
| Expenditure Category | Change (Year-on-Year) | Main Drivers |
| Social Security | +€0.05 billion (3%) | Higher health benefits and RES fund subsidies. |
| Transfers & Subsidies | +€0.14 billion (9%) | Increased grants to municipalities and social security contributions. |
| Debt Servicing | -€0.19 billion | Lower interest and domestic loan repayments. |
| Wages & Pensions | -€0.03 billion | Slight decline to €3.01 billion. |
Development and Infrastructure Highlights
A bright spot in the report is the 56% implementation rate for development expenditure, which is significantly higher than the 50% ten-year average. The state has invested heavily in physical infrastructure and social support programs:
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Roads & Buildings: €74.9 million was spent on the road network, with an additional €51.1 million for construction projects.
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Education & Research: Significant sponsorships were directed to the University of Cyprus (€109.7 million) and the Cyprus University of Technology (€57.9 million).
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Green Energy & Social Welfare: The Renewable Energy Sources (RES) Fund received €44.5 million, while €18.4 million went toward subsidizing tuition and meals for children under four.
“The 2025 implementation rate of 74% for total expenditure remains slightly above the decade’s average of 73%, signaling a steady execution of state priorities despite shifting debt obligations.” — Treasury of the Republic of Cyprus
Source: Stockwatch.com.cy