Cyprus’s Treasury reported on Monday that the implementation of the state budget through the end of October 2025 reached 65% for revenues and 59% for expenditures. While these implementation rates are lower than the previous year (75% revenue, 64% expenditure in 2024), the Ministry of Finance clarified that this is primarily a technical effect of robust debt management, rather than a weakening of core fiscal strength.
Core Revenues Demonstrate Economic Vigor
The figures confirm a healthy performance in the state’s main income sources, reflecting positive economic activity:
-
Direct Taxes: Increased by €0.16 billion (5%) compared to 2024, driven primarily by higher Income Tax collection from both individuals and legal entities, which totaled €2.75 billion.
-
Indirect Taxes: Rose by €0.13 billion (4%). This growth was largely due to an increase in VAT revenues by €0.05 billion (€2.58 billion total) and higher revenues from Excise Duties.
Debt Management Skews Implementation Percentages
The lower implementation percentage for total revenues and expenditures compared to 2024 is explained by strategic debt movements:
| Category | October 2025 (vs. 2024) | Explanation |
| Loan Assumptions (Revenue) | Decreased by €1.05 billion | The significant reduction in new borrowing offset tax increases. Loan assumptions stood at just €0.09 billion. |
| Loan & Interest Repayments (Expenditure) | Decreased by €1.18 billion | Lower repayments drove the expenditure percentage down. Total repayments were €0.82 billion (down from €2.0 billion in 2024). |
The Treasury noted that the 59% expenditure rate is below the past decade’s average of 65% for October, attributing the difference primarily to the seasonality of public debt repayments.
Key Spending Priorities Increase
Spending in crucial social and developmental areas saw notable increases:
-
Transfers and Subsidies: Increased by €0.13 billion (10%), driven by higher grants to municipalities and an increased contribution to the Social Insurance Fund.
-
Social Benefits: Rose by €0.04 billion (3%), mainly due to a significant grant channeled to the Renewable Energy Sources Fund. Health benefits also saw an increase.
-
Development Expenditures: The implementation rate for development projects reached 46%, exceeding the past decade’s average of 42% by the end of October.
Conversely, expenditure on Operational and Other Expenses decreased by €0.09 billion (11%), reflecting tighter control over administrative costs.
Source: Stockwatch.com.cy