Cyprus continued its positive fiscal trajectory in the first four months of 2025, reporting a government budget surplus of €646.8 million, equal to 1.8% of GDP. This is based on preliminary figures released by the Statistical Service of Cyprus (CYSTAT). While slightly down from the €650.5 million (1.9% of GDP) recorded in the same period of 2024, the surplus underscores the country’s ongoing financial resilience.
Revenue Growth Led by Social Contributions and Income Tax
Government revenues for January to April 2025 rose to €4.83 billion, marking a 5.3% increase year-on-year. Social contributions played a key role in this growth, surging by €135.7 million (9.4%) to reach €1.57 billion. Income and wealth taxes also performed strongly, climbing by €89.8 million (8.3%) to €1.17 billion.
Additionally, income from property more than doubled, jumping from €31 million in 2024 to €84.7 million. Sales of goods and services also added momentum, growing by €71.7 million (24.1%) to €369.7 million.
However, not all revenue streams followed this upward trend. VAT revenue dipped by €23.6 million, contributing to a slight drop in overall taxes on production and imports, which fell by €10.8 million (-0.7%). Current transfers were down €79.4 million (-38.9%), and capital transfers received dropped sharply by €17.7 million (-75.3%).
Public Spending Rises on Social Benefits and Investments
On the expenditure side, the government spent €4.18 billion—an increase of €246.6 million or 6.3% compared to early 2024. The largest contributors to this rise were social benefits, up €95.8 million (5.9%) to €1.72 billion, and employee compensation, which rose by €72 million (6.0%) to €1.27 billion.
Investment activity also intensified, with capital expenditure reaching €310.7 million, a 30% increase from the previous year. This was largely driven by an 18.7% growth in gross capital formation.
Some spending categories saw modest declines. Interest payments fell by €2.8 million (-1.8%) to €148.3 million. Intermediate consumption and subsidies were also trimmed by €5.4 million and €5.6 million, respectively.
Breakdown of Surplus by Government Sector
The €646.8 million surplus was composed of a €249 million surplus from the central government and €405.2 million from social security funds. These were partly offset by a €7.4 million deficit recorded by local government bodies. CYSTAT noted that due to limited data from some authorities, certain figures—particularly for local government—may be subject to revision.
Source: Stockwatch.com.cy