Government’s deficit at 0.3% of GDP

Cyprus' General Government recorded a deficit of €70.4 mn (0.3% of GDP) for the period of January-February 2021, compared to a surplus of €226.0 mn (1.1% of GDP) that was recorded during the period of January-February 2020, according to the preliminary fiscal results prepared by the Statistical Service of Cyprus (CyStat).

In particular, during the period of January-February 2021, total expenditure increased by €239.0 mn (+18.8%) and amounted to €1,510.3 mn, compared to €1,271.3 mn in the corresponding period of 2020. It is noted, that this increase in expenditure is due to the support measures taken to address the effects of the Covid-19 pandemic on employment, which amounted to €94.3 mn.

Social benefits increased by €20.1 mn (+3.9%) and amounted to €536.3 mn, compared to €516.2 mn in 2020. Compensation of employees (including imputed social contributions and pensions of civil servants) increased by €22.5 mn (+5.2%) and amounted to €452.0 mn, compared to €429.5 mn in 2020. Subsidies increased by €190.4 mn and amounted to €196.8 mn, compared to €6.4 mn in 2020. The increase in the specific category is mainly attributed to the support measures to enterprises due to the consequences of the Covid-19 pandemic. Current transfers increased by €17.3 mn (+17.6%) and amounted to €115.9 mn, compared to €98.6 mn in 2020. Interest payable increased by €13.5 mn (+22.9%) and amounted to €72.1 mn, compared to €58.6 mn in 2020.

The capital account fell by €4.8 mn (-8.8%) to €49.3 mn, from €54.1 mn in 2020. This drop is mainly due to gross capital formation, which decreased by €5.6 mn (-13.6%) to €35.5 mn, from €41.1 mn in 2020. On the contrary, other capital expenditure increased by €0.8 mn (+6.4%) and amounted to €13.8 mn, compared to €13.0 mn in 2020. Intermediate consumption decreased by €19.9 mn (-18.5%) to €87.9 mn, from €107.8 mn in 2020.

At the same time, during the period of January-February 2021, total revenue decreased by €57.4 mn (-3.8%) to €1,439.9 mn, compared to €1,497.3 mn in the corresponding period 2020.

In detail, taxes on production and imports decreased by €23.8 mn (-4.7%) to €485.5 mn, from €509.3 mn in 2020, of which net VAT revenue increased by €4,7 mn (+1.5%) and amounted to €315.0 mn, compared to €310.3 mn in 2020. Revenue from taxes on income and wealth decreased by €20.8 mn (-5.5%) to €358.3 mn, from €379.1 mn in 2020. Social contributions decreased by €35.7 mn (-8.2%) to €399.1 mn, from €434.8 mn in 2020. Current transfers decreased by €7.3 mn (-23.7%) to €23.7 mn, from €31.0 mn in 2020. Revenue from the sale of goods and services decreased by €28.8 mn (-24.4%) to €89.2 mn, from €118.0 mn in 2020.

On the contrary, capital transfers increased by €54.0 mn and amounted to €60.4 mn, compared to €6.4 mn in 2020. Property income increased by €5.0 mn (+26.8%) and amounted to €23.7 mn, from €18.7 mn in 2020.

Increased amounts in specific categories of expenditure and revenue are partly attributed to the full implementation of the National Health System as of 01.06.2020.