**Cyprus Government Maintains Fiscal Surplus Amid Increased Spending**
The Cyprus government has reported a general fiscal surplus of €420.30 million for the first half of 2026, which represents 1.1 percent of the country’s Gross Domestic Product (GDP). This preliminary figure, released by the Cyprus Statistical Service (Cystat) on Friday, indicates a slight increase from the €416.80 million surplus recorded during the same period in 2025.
Total government revenue for the first six months of 2026 rose by 4.1 percent, amounting to €7.40 billion, compared to €7.11 billion in the first half of the previous year. This increase of €290.30 million in revenue reflects a positive trend in various tax categories and social contributions.
Significant contributors to the revenue growth included taxes on income and wealth, which saw an increase of €101.00 million, or 6.3 percent, reaching €1.69 billion. Additionally, social contributions rose by €181.30 million, or 7.7 percent, totaling €2.54 billion. Taxes on production and imports also experienced a notable boost, increasing by €207.90 million, or 9.3 percent, to €2.45 billion. Within this category, net Value Added Tax (VAT) revenue surged by €263.80 million, or 18.0 percent, reaching €1.73 billion, up from €1.46 billion in the prior year.
However, not all revenue streams showed positive growth. Capital transfers saw a significant decline, dropping by €84.60 million to €23.00 million, down from €107.60 million in the first half of 2025. Revenue from the sale of goods and services also fell by €23.40 million, or 4.6 percent, to €481.80 million. Property income decreased by €29.30 million, or 28.5 percent, to €73.60 million, and current transfers fell by €62.60 million, or 31.4 percent, to €136.90 million.
On the expenditure side, total government spending increased by 4.3 percent, reaching €6.98 billion, compared to €6.69 billion in the same period of 2025. This rise of €286.80 million was attributed to several factors, including an increase in intermediate consumption, which rose by €88.00 million, or 13.4 percent, totaling €745.40 million.
Compensation of employees, which includes imputed social contributions and civil servants’ pensions, also saw an increase, rising by €64.90 million, or 3.4 percent, to €1.98 billion. Social benefits were another significant area of expenditure, increasing by €151.70 million, or 5.5 percent, to €2.89 billion.
Interest payments on government debt grew by €12.40 million, or 4.9 percent, reaching €263.40 million. Current transfers on the expenditure side rose by €39.90 million, or 9.1 percent, totaling €478.40 million. However, the capital account experienced a decline, decreasing by €57.10 million, or 9.0 percent, to €580.80 million, down from €637.90 million in the first half of 2025. Within this account, gross capital formation increased slightly by €8.90 million, or 2.1 percent, to €434.00 million, while other capital expenditures fell by €66.00 million, or 31.0 percent, to €146.80 million. Subsidies also decreased, dropping by €13.00 million, or 24.8 percent, to €39.40 million during this period.
Despite the increase in overall government spending, Cyprus has managed to maintain a fiscal surplus, reflecting the government's ability to balance its budget effectively amidst rising expenditures. This fiscal performance is critical as it indicates the government's ongoing efforts to manage public finances prudently while supporting economic growth through increased revenue generation.
As the year progresses, the government will likely continue to monitor these trends closely, adjusting fiscal policies as necessary to ensure sustained economic stability and growth.