Cyprus development spending hits €412m by mid-year

State revenue reaches €4.44bn amid higher tax receiptsCyprus implemented 25 per cent of its 2026 development budget during the first half of the year, maintaining the same pace as in the corresponding period of 2025 and running above the 22 per cent average recorded over the past decade, according to the state treasury. Total development expenditure budgeted for 2026 stands at €1.62bn, of which €412.39m had been implemented by the end of June. Meanwhile, state revenue reached €4.44bn, corresponding to 41 per cent of the annual target, compared with €4.21bn and the same implementation rate a year earlier. Actual expenditure rose to €4.63bn, representing 40 per cent of the annual budget, from €4.41bn and 40 per cent in the first half of 2025. The increase in revenue was mainly driven by higher tax receipts, with indirect taxes rising by €170m and direct taxes by €90m. At the same time, higher spending largely reflected increases of €110m in transfers and grants, €80m in operating and other expenses and €50m in social benefits. Loan drawdowns and repayments received by the state amounted to €1.25bn, sharply higher than €30m a year earlier. Outflows related to debt repayments and the issuance of loans reached €2.09bn, compared with €110m in 2025. Overall, the cash-based 2026 state budget provides for revenue of €10.78bn, up 5 per cent from €10.31bn last year, while expenditure is expected to increase by 3 per cent to €11.44bn, from €11.13bn. The projected revenue increase is mainly linked to an additional €130m in direct taxes and €330m in grants, while the rise in expenditure largely reflects a €360m increase in operating costs. Borrowing-related inflows and outflows have been budgeted at €1.9bn and €2.28bn respectively. More specifically, indirect tax receipts increased by 8 per cent to €2.29bn, mainly because VAT revenue climbed to €1.68bn, from €1.48bn in the first half of 2025. Direct taxes rose by 6 per cent to €1.58bn, supported by a €100m increase in corporate and personal income tax receipts, which reached €1.48bn. On the expenditure side, spending on payroll, pensions and gratuities remained unchanged at €1.63bn. However, social benefit expenditure increased by 5 per cent to €960m, from €910m. This was mainly due to additional spending of €20m on health benefits, €10m on education benefits and €10m on housing support. Transfers and grants rose by 12 per cent to €960m, compared with €850m a year earlier. The increase was mainly attributed to a €50m rise in Cyprus’ gross national income-based contribution, which reached €170m, and a €20m increase in the government contribution to the Social Insurance Fund, which stood at €350m. Operating and other expenditure also increased to €430m, from €350m. Defence and policing expenses rose by €40m to €140m, while general operating expenditure increased to €140m from €130m. Spending on consultancy services and research reached €50m, up from €40m. Conversely, financing costs, including interest and other expenses, eased to €390m, from €410m in the first half of 2025. Within the development budget, capital expenditure reached €140.8m. The largest amounts were directed towards the road network at €29.4m, construction projects at €25m and the construction, expansion and improvement of government buildings at €17.5m. A further €14.4m was spent on equipment, €11.5m on other assets and €10.7m on school buildings. Land and building purchases accounted for €7.4m, fixed and mobile machinery for €7.3m and sewage and water systems for €5.3m. Spending on co-financed projects and other financial measures amounted to €105.7m, including €25.5m for projects implemented by non-governmental services, €11.6m for the tuition and nutrition subsidy scheme for children aged up to four and €11.3m for the industry and technology service scheme. Projects financed through home affairs funds received €9.3m, while €5m went to European competitiveness programmes and €4.7m to the Save – Upgrade Homes Scheme. In addition, €4.6m was spent on the electromobility promotion scheme and another €4.6m on sustainable urban mobility. Measures addressing skills mismatches, the new assessment system and digital transformation received €4.4m, while co-financed construction projects received €3.6m and the new business activity support scheme €2.9m. Sponsorships, contributions and grants accounted for another €115.1m. The University of Cyprus (UCy) received €64.2m and the Cyprus University of Technology (Tepak) €34.4m, while the Open University of Cyprus received €5.5m. The Cyprus Institute was granted €3.9m and the Cyprus Institute of Neurology and Genetics (CING) €2.6m. Finally, development spending classified as social benefits totalled €26.8m, comprising €20.1m in education benefits, €4.2m in cultural benefits and €1.5m in housing benefits.