Increase in revenues and contained spending in Cyprus’ state budget by May

The implementation of Cyprus’ state budget for the period January–May 2025 shows a significant increase in government revenues and a containment of expenditures, according to data released by the Treasury of the Republic.

More specifically, revenues reached €3.61 billion, marking an 8% increase compared to the same period last year (€3.33 billion), mainly due to a €0.14 billion rise in direct taxes and a €0.07 billion rise in indirect taxes. These revenues represent 31% of the annual budget (2024: 30%).

On the expenditure side, payments by the end of May amounted to €3.62 billion, corresponding to 28% of the total budget (2024: 27%). This increase is mainly attributed to payroll, which rose by 7% or €0.09 billion, reaching €1.36 billion.

In terms of tax revenues, indirect taxes increased by 4% (€0.07 billion), mainly due to higher VAT revenues and other indirect taxes. Direct taxes rose by 11% (€0.14 billion), with income tax from both legal and natural persons showing a notable increase.

Regarding expenditures, social benefits reached €0.78 billion, marking a 3% rise due to higher healthcare-related spending. Transfers and subsidies saw a 13% increase, mainly because of greater contributions to the Social Insurance Fund and increased grants to municipalities.

A noteworthy decline was recorded in loan and interest repayments, which totalled €0.27 billion, down from €0.53 billion in 2024. Operating and other expenses also fell by 9%.

The implementation rate of the budget, as a percentage of the final budget, remains consistent with the ten-year average (28%), excluding the years 2020–2022, which recorded higher rates due to the seasonal repayment of public debt.

Development expenditures by May amounted to €304 million, representing 20% of the annual forecast—above the ten-year average of 17%.

As for development spending, by the end of May, capital expenditures totalled €116 million, with the majority allocated to road projects (€31.5 million), government buildings, and schools. Co-financed projects amounted to €72 million, including initiatives such as the “Save – Upgrade Homes” scheme and entrepreneurship support.

Grants and contributions to universities and research institutes reached €81.5 million, with the largest allocations going to the University of Cyprus (€46.2 million) and the Cyprus University of Technology (€25.6 million). Social benefits by the end of May amounted to €27.3 million.

(Source: CNA)