Cyprus’s preliminary General Government fiscal accounts for January–July 2026 show a budget surplus of €770.6 million (equivalent to 2.0% of GDP). In absolute financial terms, the surplus expanded by €11 million compared to the €759.6 million (2.1% of GDP) recorded over the same period in 2025.
The overall budget improvement was driven by standard revenue growth outpacing state spending increases.
Revenue Trends: Tax & Contribution Surge
Total General Government revenue climbed 4.1% to reach €8,913.8 million, representing an absolute increase of €354.1 million year on year.
Key Revenue Drivers:
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Net Value Added Tax (VAT): Soared by 14.7% (+€259.5 million) to total €2,028.2 million.
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Taxes on Production & Imports: Grew 8.1% (+€217.7 million) to hit €2,903.0 million.
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Social Insurance Contributions: Rose 7.5% (+€207.2 million) up to €2,975.1 million.
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Income & Wealth Taxes: Expanded 7.7% (+€157.5 million), reaching €2,191.0 million.
Declining Revenue Categories:
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Capital Transfers: Contracted sharply by 82.6% (-€93.1 million) down to €19.6 million.
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Current Transfers Received: Fell 24.7% (-€56.8 million) to €172.8 million.
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Service Sales Revenue: Dropped 7.3% (-€45.1 million) to €572.4 million.
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Dividends & Interest Income: Slumped 29.4% (-€33.3 million) to €79.9 million.
Expenditure Breakdown: Current Costs Rise as Capital Spending Drops
Overall public sector expenditure grew by 4.4% (+€343.1 million), bringing total spending to €8,143.2 million for the seven month period.
Main Spending Categories:
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Social Outlays: Advanced 5.2% (+€165.2 million) to total €3,356.3 million.
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Intermediate Consumption: Increased 11.7% (+€91.5 million) to €873.3 million.
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Civil Servant Compensation & Pensions: Grew 3.3% (+€74.8 million) to €2,311.0 million.
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Current Transfers Paid: Increased 9.1% (+€45.8 million) to €549.4 million.
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Debt Servicing (Interest Paid): Rose 5.6% (+€15.8 million) to €298.8 million.
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State Subsidies: Dropped 13.7% (-€8.8 million) down to €55.6 million.
Capital Expenditure Trends: Total capital expenditure retreated 5.6% (-€41.2 million) to €698.8 million. Despite this overall reduction, core infrastructure spending, measured as gross fixed capital formation, increased by 2.1% (+€10.7 million) to €519.1 million. When land expropriations are excluded, infrastructure formation grew by 3.2% (+€15.7 million) to €509.2 million.
Sub-Sector Performance
The overall €770.6 million surplus reflects diverging balances across public administration tiers:
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Social Security Funds: Posted a strong €775.1 million surplus (up from €712.0 million in Jan–Jul 2025), carrying the net national surplus.
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Central Government: Slipped into a €5.0 million deficit, reversing the €39.7 million surplus recorded during the same timeframe in 2025.
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Local Authorities: Maintained a narrow €0.5 million surplus, down from €7.9 million a year earlier. (Note: Figures for municipal sectors include provisional estimations due to missing data submissions from local agencies.)
Source: Stockwatch.com.cy