articles | 06 May 2021

Cyprus goes from fiscal surplus to deficit

As Covid-19 bit hard, Cyprus went from a budget surplus to recording an annual deficit of €251.7 million (1.1% of GDP) in the first quarter of 2021, according to preliminary General Government fiscal results.

During the same period last year, the government recorded a surplus of €226.9 million ( also 1.1% of GDP), but the Covid-19 pandemic has seen an upsurge in state spending.

In the first three months to March, total expenditure increased by €372.8 million (+19.4%), amounting to €2.29 billion, compared to €1.91 billion in Q1 2020.

The sharp increase in expenditure is due to the support measures taken to address the effects of the Covid-19 pandemic on jobs and businesses.

Social benefits increased by €77.1 million (+10.3%) to €826.6 million, from €749.5 million in 2020.

Compensation to employees (including social contributions and pensions of civil servants) increased by €30.1 million (4.6%) to €679.8 million, compared to €649.7 million last year.

Subsidies increased by €264.4 million to €274.8 million, from €10.4 million in Q1 2020.

It is mainly attributed to support measures for enterprises due to the consequences of lockdown.

The capital account decreased by €19.7 million (14.5%) to €115.8 million, from €135.5 million in 2020.

This decrease is mainly due to gross capital formation, which decreased by €34.0 million (30.6%) to €77.3 million, from €111.3 million.

On the contrary, other capital expenditure increased by €14.3 million (59.3%), reaching €38.5 million, compared to €24.2 million in 2020.

Intermediate consumption decreased by €12.5 million (7.3%) to €158.6 million, down from €171.1 million.

Revenue

During January-March 2021, total revenue decreased by €105.8 million (4.9%) to €2.03 billion, compared to €2.14 million in the same period of 2020.

Taxes on production and imports decreased by €49.1 million (6.5%) to €702.7 million, from €751.8 million in 2020, of which net VAT revenue decreased by €38.7 million (8.3%) to €427.2 million, from €465.9 million. Revenue from taxes on income and wealth decreased by €31.4 million (6.1%) to € 480.4 million, from €511.8 million.

Social contributions decreased by €24.5 million (4.0%) to €592.0 million, from €616.5 million in 2020.

Capital transfers increased by €15.6 million (32.8%) to €63.2 million from €47.6 million.

Property income increased by €4.9 million (17.8%) and amounted to €32.2 million, from €27.3 million in 2020.

Increased amounts of expenditure and revenue are partly attributed to the full implementation of the National Health System on 1 June 2020.

Source: Financial Mirror

Cooperation Partners
  • Logo for Ministry of Energy, Commerce, Industry and Tourism
  • Logo for Association of Cyprus Banks
  • Logo for Cyprus Investment Funds Association
  • Logo for CYFA Cyprus
  • Logo for Cyprus Chamber of Commerce and Industry
  • Logo for Cyprus In Your Heart
  • Logo for Cyprus International Businesses Association
  • Logo for Invest Cyprus
  • Logo for Cyprus Shipping Chamber