The implementation rate of development expenditures in the state budget for the first eight months of 2024 has exceeded the average of the past decade, reaching 34% by the end of August, compared to a historical average of 31%. In monetary terms, this represents €523.1 million out of a total annual development expenditure budget of €1.52 billion.

According to the August 2024 "Implementation of the State Budget" report published by the Treasury Office of the Republic on Monday, total revenues by the end of August amounted to €6.97 billion, which is equivalent to 62% of the state budget (2023: €6.60 billion, 68%). Actual expenditures reached €7.08 billion, reflecting an implementation rate of 53% (2023: €6.68 billion, 56%).

The Treasury Office noted that revenue performance shows a decline compared to the same period last year (2024:62%, 2023:68%), primarily due to timing differences in the execution of transfers and grants (2024: 12%, 2023: 32%).

Similarly, there is a slight decrease in budget implementation concerning expenditures (2024: 53%, 2023: 56%), mainly due to the timing of public debt repayments (2024: €1.91 billion, 57%; 2023: €1.75 billion, 68%).

The report also highlights that the state budget, prepared on a cash basis, indicates a 16% year-on-year increase in revenues for 2024 (€11.28 billion vs. €9.77 billion in 2023) and a 12% rise in expenditures (€13.45 billion vs. €12 billion in 2023).

The increase in revenues is mainly driven by a €0.68 billion rise in indirect taxes and a €0.61 billion increase in direct taxes. The growth in expenditures is attributed to higher loan and interest repayments, as well as increased outlays for salaries, pensions, and allowances by €0.77 billion and €0.36 billion, respectively.

Revenues Overview

By the end of August 2024, indirect taxes rose by €0.13 billion (5%) compared to 2023, primarily due to a €0.12 billion increase in VAT revenues (2024: €2 billion, 2023: €1.88 billion).

Direct taxes increased by €0.41 billion (19%) compared to the previous year, mainly due to higher corporate and individual income tax collections (2024: €2.29 billion, 2023: €1.88 billion).

Withdrawals from loans saw a slight decrease of €0.03 billion (3%) compared to the same period in 2023, mainly due to a reduction in long-term foreign loan withdrawals (2024: €1.09 billion, 2023: €1.12 billion).

Expenditure Analysis

Expenditures for salaries, pensions, and allowances by the end of August showed a 5% increase (€0.09 billion) from €1.95 billion in 2023 to €2.04 billion in 2024.

Loan and interest repayments until August amounted to €1.91 billion (2023: €1.75 billion), with €1.05 billion (2023: €1.04 billion) allocated to foreign loan repayments, €0.52 billion (2023: €0.42 billion) to interest payments, and €0.33 billion (2023: €0.28 billion) to domestic loan repayments.

Social benefits expenditures reached €1.17 billion by the end of August (2023: €1.09 billion), marking a 7% increase. This rise is primarily attributed to a €0.04 billion increase in social welfare benefits (2024: €0.50 billion, 2023: €0.46 billion) and a similar increase in health benefits (2024: €0.50 billion, 2023: €0.46 billion).

Transfers and grants rose to €1.05 billion (2023: €0.96 billion), reflecting a 9% increase, largely due to a higher General Government Contribution to the Social Insurance Fund (€0.41 billion in 2024 vs. €0.36 billion in 2023), as well as increased grants to the University of Cyprus (€0.07 billion vs. €0.05 billion) and the Technological University (€0.04 billion vs. €0.02 billion).

Operational and Other Expenses

Operational and other expenses until August totaled €0.58 billion (2023: €0.59 billion), showing a marginal decrease of 2%.

Implementation of Development Expenditures

As reported by the Treasury Office, capital expenditure implementation reached €195.7 million by August 2024. Key expenditures include €70.1 million for the road network, €21.3 million for the construction and improvement of school buildings, €18.1 million for the purchase of land and buildings, €13.9 million for sewage and water systems, €13.5 million for machinery, and €8.3 million for the construction and extension of government offices.

Co-funded and other financial expenditures totaled €120.6 million, including €26.4 million for NGO-led projects, €25 million for projects co-funded by the Internal Affairs Funds, €13.2 million for the Tuition and Child Care Subsidy Programme for children under 4 years, €10.1 million for the SME Competitiveness Programme, €6.9 million for European Competitive Programmes, and €5.9 million for the Energy Efficiency Housing Programme.

Grants, Contributions, and Subsidies

Grants, contributions, and subsidies by the end of August 2024 stood at €153.5 million, compared to €75.6 million during the same period in 2023 (2024: 59% implementation rate, 2023: 28%).

The discrepancy is mainly due to timing differences in grant provisions, such as the increased grant to the University of Cyprus (€74.4 million vs. €45.9 million), the Cyprus University of Technology (€42.3 million vs. €18.7 million), and the Research and Innovation Foundation (€15.7 million vs. €0).

Other notable grants include those to the Open University of Cyprus (€6.5 million vs. €2.7 million), the Cyprus Institute (€6.2 million vs. €1.6 million), and the Institute of Neurology and Genetics (€3.8 million vs. €1.8 million).

Implementation of Social Benefits

Social benefits implementation by the end of August 2024 reached €35.2 million, largely driven by the government scholarship programme (€12.8 million), grants to volunteer organisations (€11.3 million), expenditures for cultural benefits (€3.9 million), and student welfare grants (€2 million).