Cyprus government collects €7.51 billion in revenue by end of September

Cyprus government spending reaches 61 per cent of budget by SeptemberCyprus recorded higher government revenues and expenditure during the first nine months of 2026, while the implementation of development spending accelerated compared with previous years, according to a report published on Friday by the Treasury. The government collected €7.51 billion in revenue between January and September, equivalent to 70 per cent of its full-year budgeted income, while actual expenditure reached €7.01 billion, representing 61 per cent of the annual spending allocation. The figures mean that government revenues exceeded expenditure by approximately €500 million during the period, before accounting for borrowing-related cash flows. Compared with the corresponding period of 2025, revenues increased by €670 million, while expenditure rose by €410 million. The report also highlighted an improvement in the pace of development spending, with 44 per cent of the annual allocation implemented by the end of September, compared with 41 per cent during the same period last year and a 10-year average of 36 per cent. Of the €1.62 billion allocated for development expenditure in the 2026 budget, €711.6 million had been spent by the end of September. Higher tax revenues drive government income The increase in government revenue was primarily driven by stronger collections from direct and indirect taxation. Direct tax receipts increased by €480 million, or 17 per cent, compared with the first nine months of 2025, reaching €3.05 billion from €2.58 billion. The increase was mainly attributable to higher income tax collections from both individuals and companies, which together rose by €470 million. Indirect taxes increased by €250 million, or 8 per cent, reaching approximately €3.25 billion. This was largely due to higher value added tax (VAT) receipts, which rose by €270 million, from €2.29 billion in 2025 to €2.56 billion in 2026. Overall, the increase in tax revenues more than accounted for the rise in government income during the period. Where government money is going Total government expenditure increased from €6.60 billion in the first nine months of 2025 to €7.01 billion this year. The largest spending category remained salaries, pensions and gratuities, which were unchanged at €2.45 billion compared with the corresponding period last year. Spending on social benefits increased by €100 million, or 7 per cent, reaching €1.47 billion, compared with €1.37 billion in 2025. The Treasury attributed the increase mainly to higher healthcare benefits, which rose by €40 million, while education and social welfare benefits each increased by €20 million. Transfers and grants also increased, reaching €1.42 billion compared with €1.31 billion a year earlier, representing a rise of €110 million, or 9 per cent. This was mainly driven by a €30 million increase in the general government contribution to the Social Insurance Fund, which reached €530 million from €500 million. The contribution linked to the European Union’s gross national income-based own resource also increased by €70 million, reaching €230 million from €160 million. Operational and other expenditure rose by €150 million, reaching €740 million compared with €590 million in 2025. The increase included an additional €70 million for defence and policing, bringing spending in that category to €250 million from €180 million. General operating costs increased by €30 million, reaching €250 million, while expenditure on consultancy services and research rose by €20 million to €70 million. Compensation payments and legal expenses also increased by €20 million, reaching €40 million. Meanwhile, government financing costs amounted to €460 million by the end of September, slightly below the €480 million recorded during the same period of 2025. These costs cover interest payments and related expenses. Development spending gathers pace The report’s development expenditure figures provide a breakdown of how public investment and other development-related allocations have been used. Capital expenditure reached €243.6 million by the end of September. The largest component was spending on the road network, which amounted to €49.3 million, followed by construction projects at €39.5 million. Government spending on land and buildings reached €24.5 million, while €23.1 million went towards the construction, extension and improvement of government buildings. Equipment purchases accounted for €22.6 million, while the acquisition of other assets amounted to €19.9 million. A further €18.1 million was spent on sewerage and water systems, while school construction, extensions and improvements accounted for €16.3 million. The purchase of fixed and mobile machinery amounted to €11.6 million. A separate €216.6 million was spent on co-funded projects and other financing expenditure. The largest allocation in this category, €93.7 million, concerned co-funded projects implemented by non-governmental services. Projects financed through the EU’s Internal Affairs Funds accounted for €18.8 million, while the Industry and Technology Service Scheme also received €18.8 million. The scheme subsidising childcare fees and meals for children up to four years old accounted for €15.7 million, while the Sustainable Urban Mobility Promotion Scheme received €8.8 million. Other expenditure included €7.5 million for the Save and Upgrade Homes scheme, €6.3 million for initiatives addressing skills mismatches, introducing a new evaluation system and supporting digital transformation, and €5.5 million for European competitive programmes. Co-funded construction projects accounted for €4.8 million, while €4.7 million went towards promoting electric mobility and €4.1 million towards supporting new business activity. Grants, contributions and subsidies amounted to €168.3 million. The University of Cyprus received the largest share, at €93 million, followed by the Cyprus University of Technology with €48.4 million. The Open University of Cyprus received €9.1 million, the Cyprus Institute €5.8 million and the Cyprus Institute of Neurology and Genetics €4.8 million. A further €40.9 million was allocated under development-related social benefits. This included €21.9 million for education and healthcare benefits, €7.9 million for a grant to the Renewable Energy Sources and Energy Conservation Fund, €7.1 million for cultural benefits and €2.5 million for housing benefits. Full-year budget projects higher revenues and spending The Treasury also outlined the overall financial framework for 2026, which is prepared on a cash basis, meaning it records money received and paid during the period. The state’s full-year budget projects revenues of €10.78 billion, representing a 5 per cent increase from €10.31 billion in 2025. Total expenditure is budgeted at €11.53 billion, up 4 per cent from €11.13 billion last year. The projected increase in revenues is mainly attributed to an additional €130 million in direct taxes and €330 million in grants. On the expenditure side, the largest contributor to the planned increase is operating costs, which are expected to rise by €320 million. The budget also provides for borrowing-related inflows of €1.9 billion and outflows of €2.28 billion. Separately, the actual borrowing-related inflows during the first nine months of 2026 amounted to €1.35 billion, compared with just €70 million during the corresponding period of 2025. Borrowing-related outflows reached €2.14 billion, compared with €160 million a year earlier. The figures reflect the substantial movement of government borrowing and debt repayments during the period, which are recorded separately from ordinary government revenue and expenditure. Indeed, the report shows that tax collections have strengthened, public spending has increased and development projects are being implemented at a faster pace than in previous years, with nearly half of the annual development budget already used by the end of September.