Local
articles | 01 September 2020

Deficit in General Government fiscal results for January – July

The preliminary General Government fiscal results, which are prepared by the Statistical Service of Cyprus (CyStat) indicate a deficit of €930.9 million (4.6% of GDP) for the period of January – July 2020, as compared to a surplus of €385.7 million (1,8% of GDP) that was recorded during the period of January – July 2019.

According to a press release of the Statistical Service, total expenditure increased by €109.1 million (+14.0%) and amounted to €887.9 million from €778.8 million in July 2019.

Among the main categories of expenditure:

– Subsidies increased by €117.5 million in July 2020 compared to July 2019 (amounted to €120.9 million from €3.4 million)

– Intermediate consumption by 18.3% (amounted to €129.4 million from €109.4 million)

– Current transfers by 10,5% (amounted to €42.1 million from €38.1 million)

– Compensation of employees (including imputed social contributions and pensions of civil servants) by 3.3% (amounted to €217.3 million from €210.4 million)

On the contrary, social benefits decreased by 5.2% (€217.3 million compared to €229.3 million).

Total revenue decreased by €157.3 million (-17.0%) to €766.7 million, from €924.0 million in July 2019.

Among the main categories of revenue:

– Total taxes on production and imports decreased by 17.9% in July 2020 compared to July 2019 (€300.9 million compared to €366.6 million)

– Net VAT revenue by 9.6% (€209.3 million compared to €231.6 million)

– Social contributions by 29.4% (€157.0 million compared to €222.4 million)

– Revenue from taxes on income and wealth by 12.8% (€222.1 million compared to €254.8 million)

– Revenue from the sale of goods and services by 1.7% (€63.8 million compared to €64.9 million)

The increase in expenditure and the decrease in revenue for July 2020 are mainly due to the measures taken to support enterprises and the suspension of various sectors of the economy, respectively, as a result of the Covid-19 pandemic.

During the period of January – July 2020, total expenditure increased by €588.6 million (+12.8%) and amounted to €5,180.9 million, compared to €4.592.3 million in the corresponding period of 2019.

It is noted, that this significant increase in expenditure is due to the support measures taken to address the effects of the Covid-19 pandemic on employment, which amounted to €431.7 million.

Intermediate consumption increased by €253.7 million (+51.3%) and amounted to €748.4 million, compared to €494.7 million in 2019.

Social benefits increased by €51.8 million (+3.3%) and amounted to €1,625.5 million, compared to €1,573.7 million in 2019.

Compensation of employees (including imputed social contributions and pensions of civil servants) increased by €74.3 million (+5.2%) and amounted to €1,499.8 million, compared to €1,425.5 million in 2019.

Subsidies increased by €402.9 million and amounted to €427.9 million, compared to €25.0 million in 2019. The increase in the specific category is mainly attributed to the support measures to enterprises due to the consequences of the Covid-19 pandemic.

Current transfers increased by €45.2 million (+15.1%) and amounted to €343.9 million, compared to €298.7 million in 2019.

The capital account decreased by €216.4 million (-50.0%) to €216.1 million, from €432.5 million in 2019. This decrease is mainly due to other capital expenditure, which decreased by €271.7 million (-86.7%) to €41.8 million, from €313.5 million in 2019.

On the contrary, gross capital formation increased by €55.3 million (+46.5%) and amounted to €174.3 million, compared to €119,0 million in 2019.

Interest payable decreased by €22.9 million (-6.7%) to €319.3 million, from €342.2 million in 2019.

During the period of January – July 2020, total revenue decreased by €728.0 million (-14.6%) to €4,250.0 million, compared to €4,978.0 million in the corresponding period 2019.

Taxes on production and imports decreased by €315.9 million (-15.8%) to €1,682.8 million, from €1,998.7 million in 2019, of which net VAT revenue decreased by €167.9 million (-13.0%) to €1,124.7 million, compared to €1,292.6 million in 2019.

Revenue from taxes on income and wealth decreased by €70.7 million (-6.7%) to €984.3 million, from to €1,055.0 million in 2019.

Social contributions decreased by €290.8 million (-21.7%) to €1,047.9 million, from €1,338.7 million in 2019.

Property income decreased by €53.6 million (-81.1%) to €12.5 million, from €66.1 million in 2019.

Revenue from the sale of goods and services decreased by €1.3 million (-0.4%) to €361.2 million, from to €362.5 million in 2019.

On the contrary, current transfers increased by €4.3 million (+4.4%) and amounted to €102.9 million, compared to €98.6 million in 2019.

Increased amounts in specific categories of expenditure are partly attributed to the implementation of the National Health System as of March 1, 2019.

Source: In-Cyprus

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