Cyprus government surplus rises to €1.59 billion as tax revenues surge

Cyprus recorded a €1.59 billion general government surplus in the first eight months of 2026, according to preliminary figures from the Cyprus Statistical Service (Cystat), marking a substantial increase from the same period last year. The surplus reached €1.59 billion, equivalent to 4.1 per cent of GDP, between January and August 2026, compared with €1.27 billion, or 3.5 per cent of GDP, in the corresponding period of 2025. The improvement came as government revenue increased considerably faster than expenditure during the period. Total government revenue rose by €615.80 million, or 6 per cent, to €10.84 billion, from €10.23 billion in the first eight months of 2025. Revenue from taxes on income and wealth increased by €382.40 million, or 14.2 per cent, reaching €3.08 billion compared with €2.70 billion a year earlier. Social contributions also increased strongly, rising by €218.80 million, or 7 per cent, to €3.36 billion from €3.14 billion. Taxes on production and imports rose by €252.90 million, or 8.2 per cent, reaching €3.34 billion compared with €3.09 billion in the same period of 2025. Within this category, net VAT revenue increased by €300.50 million, or 14.7 per cent, reaching €2.35 billion compared with €2.04 billion a year earlier. The increase in tax revenues was partly offset by declines in several other sources of government income. Capital transfers fell by €101.70 million to €89.90 million, from €191.60 million in the first eight months of 2025. Revenue from the sale of goods and services declined by €14 million, or 2.1 per cent, to €665 million from €679 million. Property income fell by €37.70 million, or 30.7 per cent, to €85.20 million from €122.90 million. Current transfers also declined, falling by €84.90 million, or 28.1 per cent, to €217.30 million from €302.20 million. Government expenditure increased at a considerably slower pace than revenue, rising by €296 million, or 3.3 per cent, to €9.25 billion from €8.96 billion. Intermediate consumption increased by €94.70 million, or 10.3 per cent, reaching €1.01 billion compared with €919.20 million in 2025. Compensation of employees, including imputed social contributions and pensions of civil servants, increased by €42.20 million, or 1.6 per cent, to €2.64 billion from €2.59 billion. Social benefits represented the largest item of expenditure and increased by €188.90 million, or 5.2 per cent, reaching €3.80 billion compared with €3.61 billion a year earlier. Interest payable rose by €6.40 million, or 2.2 per cent, to €298.50 million from €292.10 million. Current transfers increased by €21.90 million, or 3.7 per cent, reaching €614.50 million compared with €592.60 million. At the same time, spending through the capital account fell by €45.50 million, or 5.3 per cent, to €819.80 million from €865.30 million. Gross capital formation declined by €11.30 million, or 1.8 per cent, to €603.10 million from €614.40 million. Other capital expenditure fell by €34.10 million, or 13.6 per cent, to €216.70 million from €250.80 million. Government subsidies also declined, falling by €12.80 million, or 16.1 per cent, to €66.80 million from €79.60 million. The figures show that the government’s fiscal position strengthened during the first eight months of the year, with the €320 million increase in the surplus reflecting the combination of stronger revenues and more restrained growth in expenditure. Cystat cautioned, however, that the figures are preliminary and that estimates have had to be produced for a number of general government entities. This applies particularly to the local government subsector, where Cystat said estimates were necessary because the competent authorities had not submitted sufficient data. The figures cover the general government sector and therefore extend beyond the central government budget to include other public-sector entities and local government. The stronger surplus comes as Cyprus continues to maintain a relatively strong fiscal position, with higher tax receipts and social contributions providing the government with greater room to manage public spending and public finances. The rise in VAT receipts is particularly significant, reflecting both higher revenues from consumption and the broader strength of economic activity during the period. The figures will remain subject to revision as more complete information becomes available from government entities and local authorities.