**Cyprus Records €552.9 Million Fiscal Surplus in Early 2026**
Cyprus has reported a general government fiscal surplus of €552.9 million for the first five months of 2026, according to preliminary data released by the Cyprus Statistical Service (Cystat) on Tuesday. This surplus represents approximately 1.4% of the country's Gross Domestic Product (GDP), slightly down from a surplus of €544.5 million, or 1.5% of GDP, recorded during the same period in 2025.
The increase in surplus was primarily attributed to a rise in tax revenues and social contributions, which effectively countered an uptick in public expenditure. Total government revenue for the January to May 2026 period rose by €282.5 million, or 4.8%, reaching €6.2 billion compared to €5.92 billion in the previous year.
Key contributors to this revenue growth included a notable increase in taxes on income and wealth, which surged by €115.2 million, or 8.4%, totaling €1.49 billion, up from €1.37 billion in the same timeframe of 2025. Additionally, social contributions saw an increase of €102.2 million, or 5.2%, reaching €2.07 billion, compared to €1.96 billion a year earlier. Taxes on production and imports also experienced growth, rising by €93.1 million, or 4.9%, to €2.00 billion from €1.90 billion in 2025.
Within the category of taxes on production and imports, net VAT revenue was particularly strong, climbing by €138 million, or 11.0%, to €1.39 billion from €1.25 billion. Furthermore, revenue from capital transfers increased significantly, rising by €26.4 million to €38.8 million compared to €12.4 million during the same period last year. Income from the sale of goods and services also saw a modest increase of €9.4 million, or 2.2%, totaling €433.2 million.
However, not all revenue sources performed positively. Property income fell by €24.2 million, or 26.1%, to €68.5 million, down from €92.7 million in 2025. Current transfers also declined, dropping by €39.6 million, or 25.5%, to €115.7 million compared to €155.3 million a year earlier.
On the expenditure side, total government spending rose by €274.1 million, or 5.1%, reaching €5.65 billion, up from €5.38 billion in the first five months of 2025. The largest increase in expenditure was seen in social benefits, which rose by €108.2 million, or 4.9%, totaling €2.31 billion compared to €2.20 billion in the previous year. Compensation of employees, which includes imputed social contributions and civil servants’ pensions, also increased by €47.6 million, or 3.0%, reaching €1.64 billion.
Interest payments on government debt saw an increase of €32.3 million, or 15.7%, totaling €238.4 million compared to €206.1 million in the same period of 2025. Furthermore, expenditure on current transfers rose significantly, increasing by €70.5 million, or 19.6%, to €429.3 million from €358.8 million.
In contrast, capital expenditure experienced a decline, dropping by €26.8 million, or 6.0%, to €418.7 million compared to €445.5 million in the same period last year. This decline was driven by a reduction in gross capital formation, which fell by €25.4 million, or 7.2%, to €327.7 million from €353.1 million. Other capital expenditures also saw a slight decrease of €1.5 million, or 1.6%, totaling €90.9 million.
Cystat noted that the figures are preliminary and that estimates were used for several general government entities, particularly within the local government subsector, due to insufficient data provided by relevant authorities.
As Cyprus continues to navigate its fiscal landscape, the reported surplus highlights the government's ability to maintain a positive financial position despite rising expenditures. The focus on increasing tax revenues and social contributions may suggest a strategic approach to bolstering the economy in the coming months.