Cyprus closed out the first quarter of 2025 on a strong fiscal note, reporting a budget surplus of €580.6 million, which equals 1.6% of GDP, according to preliminary data from the Statistical Service of Cyprus. This is a modest rise from the €575.7 million surplus (1.7% of GDP) recorded during the same period in 2024.
What’s Behind the Boost?
The surge in government revenue during Q1 was largely fueled by a jump in social contributions, which increased by €110.4 million (10.5%) to hit €1.162 billion. Income and wealth taxes followed closely behind, rising by €70.7 million (7.7%) to reach €985.9 million.
Also making a notable leap were revenues from goods and services, which climbed by €63.2 million (29.1%) to €280.5 million. Taxes on production and imports posted a smaller, yet still positive, gain of €29 million (2.7%), amounting to €1.101 billion, with net VAT revenue nearly flat at €731.6 million (up just 0.4%).
Not All Revenue Streams Grew
A few income sources declined. Current transfers dropped sharply by €47.9 million (40.5%) to €70.4 million, while capital transfers nosedived by €9.2 million (78%), reaching a low of €2.6 million. Meanwhile, property income dipped slightly by €1.7 million (8.1%), landing at €19.4 million.
Spending Also Rises, Especially on Social Benefits & Projects
Total public expenditures stood at €3.042 billion, marking a €209.5 million increase (7.4%) compared to the first quarter of last year.
A significant chunk went toward social benefits, which jumped by €110.3 million (9.4%) to €1.288 billion. The wage bill and pensions for civil servants rose by €57.1 million (6.4%) to €954.6 million.
The government also ramped up capital expenditure, which soared by €59.5 million (38.2%) to €215.4 million. Within that, gross capital formation rose 13% (€19.3 million) to €168.2 million, while other capital expenses surged to €47.2 million, up from just €7 million a year ago.
Where Spending Was Trimmed
Despite overall spending rising, some categories shrank. Intermediate consumption (i.e., government operating costs) fell by €12.7 million (4.3%), ending at €282.4 million. Current transfers dipped slightly by €3.9 million (2%), and subsidies saw a €2 million decline (5.2%), settling at €36.2 million.
In summary, Cyprus started 2025 with a strong fiscal position, supported by rising revenues in key areas like social contributions and taxes, while also increasing spending in growth-driving sectors.
Source: Stockwatch