articles | 18 May 2013

Cost cutting pays off in first quarter

Public finances recorded a surplus of €44.2m during the first quarter of 2013 due to a reduction of government expenditure by 17.2 per cent.

Despite a reduction of 7.6 per cent in income, cost-cutting measures by the government led to a surplus of €44.2m according to the Statistical Services which had reported a deficit of €148m during the first three months of 2012.

The surplus was mainly due to a decrease of 6.9 per cent in civil servant salaries, a decrease of 23 per cent in social benefits and a 21.8 per cent decrease in government operating expenses.

State revenue during the first three months of 2013 came to €1.6 billion which is 7.6 per cent less than the corresponding period in 2012, while state expenditure, which came to €1.56 billion, decreased by 17.2 per cent since the first quarter of last year.

The main sources of state revenue during the period between January and March of 2013 were taxes on production and imports, which came to €451 million, 25.1 per cent less than during the same period in 2012. The government also received €244 million from VAT which was 28.5 per cent less than in 2012 and €411 million from income tax which was also 22.8 per cent less than last year.

Revenue from state services came to €270 million which is 147 per cent higher thanduring the corresponding period of 2012.

The main areas of state expenditure during the first quarter of 2013 were employee salaries, including civil servant pensions, which came to €609 million, a 6.9 per cent decrease from 2012. Social benefits were down 23 per cent, reaching €449 million while operating costs came to €156 million which was 21.8 per cent less than the first three months of last year.

During the fourth quarter of 2012 there was a deficit of €538.5 million, compared to a deficit of €592.4 million during the corresponding period of 2011. Total revenue increased by 7.7 per cent from the same period of 2011, while total expenditure had increased by 3.7 per cent.

In 2012 public finances recorded a deficit of €1.1 billion, which corresponds to 6.3 per cent Gross Domestic Product (GDP).

Overall, last year, expenditure rose by 0.1 per cent compared to 2011, while revenue also increased marginally by 0.2 per cent in comparison to the previous year.

Source: Cyprus Mail

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