**Cyprus Tax Revenues Drive Rise in State Income to €3.8 Billion**
The Treasury of Cyprus has reported a significant increase in state revenues for the first five months of 2026, with total income reaching €3.8 billion. This figure represents a 5.8% increase compared to the same period in 2025, when revenues totaled €3.59 billion. The data, released on Monday, indicates that the implementation of the state budget has reached 35% for revenues and 32% for expenditures by the end of May 2026.
The growth in revenue has been primarily attributed to increases in both indirect and direct tax collections. Indirect taxes rose by €120 million, or 7%, largely driven by a notable increase in value-added tax (VAT) receipts, which climbed to €1.42 billion from €1.28 billion in the previous year. Direct taxes also experienced an 8% increase, with income tax from individuals and legal entities rising by €110 million to a total of €1.29 billion.
On the expenditure side, the Treasury reported that total spending reached €3.7 billion, reflecting an implementation rate of 32%. This is consistent with the previous year's figures, where expenditures also stood at €3.54 billion. The rise in spending has been primarily linked to increased funding for transfers and subsidies, which saw an increase of €70 million, as well as social benefits, which rose by €40 million. Operational costs also increased by €40 million, while expenditures for salaries, pensions, and gratuities experienced a minor decrease of €10 million, resulting in a total of €1.35 billion.
The report highlighted that social benefits accounted for a significant portion of the increased spending, totaling €820 million, which represents a 5% increase compared to 2025. This rise was attributed to higher allocations for health, education, and housing support, which increased by €20 million, €10 million, and €10 million, respectively. Transfers and subsidies reached €790 million, marking a 10% increase over the previous year, influenced by higher national income contributions and payments to the Social Insurance Fund.
Operational and other expenses rose to €330 million, with the Treasury noting that €20 million of this increase was due to higher spending on defense and policing. Financing expenses, including interest payments, remained stable at €210 million.
In terms of capital expenditure for development projects, the implementation reached €111.3 million by the end of May. These funds were allocated to various initiatives, including road networks, construction works, government buildings, and equipment purchases. The average implementation rate for development expenditure over the past decade during the first five months has been 17%, while the rate for 2026 stands at 19%, indicating an improvement in the execution of development projects.
Loan activities also showed notable figures, with inflows from repayments totaling €1.06 billion, while outflows for loan repayments and new issuances amounted to €2.06 billion. The Treasury explained that the significant variance in loan figures compared to 2025 is attributed to the differing timing of the issuance of European Medium Term Notes.
Additionally, co-funded projects and other financial disbursements reached €83.9 million, supporting various schemes, including industrial technology, educational subsidies, and sustainable urban mobility initiatives. Contributions to academic and research institutions, such as the University of Cyprus and the Cyprus University of Technology, totaled €69.7 million. Social benefits distributed during this period amounted to €24.5 million, which included €20 million for education, €2.6 million for cultural support, and €1.2 million for housing assistance.
Overall, the data released by the Treasury reflects a robust performance in both revenue generation and budget execution for Cyprus in the early months of 2026, driven by strong tax collection and targeted expenditure in key areas such as social benefits and development projects.