Cyprus’s state budget implementation rates for the first nine months of 2025 were lower than the previous year, but the Treasury of the Republic reported this was primarily due to significant reductions in loan transactions rather than a slowdown in the core economy. In fact, core tax revenues showed healthy growth during the period.
The Headline Figures
By the end of September 2025, total state revenues reached €6.91 billion, or 59% of the total budgeted amount for the year. This is a decrease from the 68% implementation rate seen at the same point in 2024.
Total expenditures reached €6.75 billion, representing 52% of the annual budget, compared to 58% implementation in the previous year.
Core Revenues Show Strength
Despite the lower overall revenue rate, the state’s core income streams performed well.
- Direct Taxes (including income tax from individuals and corporations) increased by 5% (€0.15 billion) compared to 2024.
- Indirect Taxes also rose by 5% (€0.14 billion), driven largely by a €70 million increase in VAT receipts.
The Treasury noted the main reason for the lower overall revenue implementation was a €1.06 billion reduction in loan drawdowns compared to the same period in 2024.
Spending Shifts and Debt Repayments
The expenditure side was similarly affected by financing activities. The main reason for the reduced spending rate was a €1.33 billion decrease in the repayment of loans and interest compared to 2024.
In contrast, government spending on public services and support saw notable increases:
- Transfers and Subsidies: This category saw a 13% jump, an increase of €0.15 billion.
- Social Benefits: Spending on items like healthcare rose by 3% (€0.04 billion) to reach €1.37 billion.
Context on Budget Timing
The Treasury provided context for the 52% expenditure rate, noting that while the 10-year average for September is 60%, the 2025 figures are lower mainly due to the “seasonality of public debt repayments.”
In a positive sign for economic investment, the implementation of development expenditures (capital projects) is performing above the historical average, reaching 39% implementation by the end of September, compared to the 10-year average of 36%.
Source: Stockwatch.com.cy