Cyprus recorded a general government fiscal surplus of €420.3 million, equivalent to 1.1% of GDP, during the first half of 2026, according to preliminary data released by CySTAT. The surplus was marginally higher than the €416.8 million, or 1.1% of GDP, recorded in the corresponding period of 2025.
Total government revenue rose by 4.1% year-on-year to €7.40 billion from €7.11 billion in the first six months of 2025, while total expenditure increased by 4.3% to €6.98 billion from €6.69 billion.
Revenue growth was driven mainly by higher tax receipts and social contributions. Taxes on production and imports increased by €207.9 million, or 9.3%, to €2.45 billion, with net VAT revenue posting the strongest increase, rising by €263.8 million, or 18%, to €1.73 billion.
Revenue from taxes on income and wealth increased by €101 million, or 6.3%, to €1.69 billion, while social contributions rose by €181.3 million, or 7.7%, to €2.54 billion.
On the other hand, capital transfers fell sharply to €23 million from €107.6 million a year earlier. Revenue from sales of goods and services, interest and dividends received, and current transfers also declined.
On the expenditure side, social benefits increased by €151.7 million, or 5.5%, to €2.89 billion, while compensation of employees rose by €64.9 million, or 3.4%, to €1.98 billion. Intermediate consumption recorded the strongest percentage increase among major expenditure categories, rising by 13.4% to €745.4 million.
Interest payments increased by 4.9% to €263.4 million, while current transfers rose by 9.1% to €478.4 million.
Capital expenditure declined by 9% to €580.8 million, mainly reflecting a 31% drop in other capital transfers. Gross fixed capital formation, however, increased by 2.1% to €434 million.
By subsector, the central government recorded a deficit of €218.6 million compared with a deficit of €185 million in the first half of 2025. Local government posted a deficit of €14.8 million, compared with €16.6 million a year earlier. Social security funds recorded a surplus of €653.7 million, up from €618.4 million, supporting the overall fiscal balance.
(Source: CNA)