The Treasury of Cyprus reports that state budget execution through May 2026 hit €3.8 billion in revenues and €3.7 billion in expenditures, outperforming last year's performance.

Overview of State Revenues and Expenditures

The implementation of the state budget by the end of May 2026 reached 35% for revenues and 32% for expenditures, according to data published on Monday by the Treasury.

Specifically, by the end of May 2026, revenues amounted to €3.8 billion, (2025: €3.59 billion, 35%) and actual expenditures amounted to €3.7 billion (2025: €3.54 billion, 32%).

According to the Treasury, revenues show an increase compared to the corresponding period last year, mainly due to the increase in revenues from indirect and direct taxes by €0.12 billion and €0.11 billion respectively. It is noted that the increased implementation regarding expenditures is mainly due to the increase in expenditures on transfers and grants by €0.07 billion, social benefits by €0.04 billion, and operational expenditures by €0.04 billion.

Trends in Direct and Indirect Taxation

Furthermore, Treasury notes that the Inflows from Withdrawals and Repayments of Issued Loans by the end of May 2026 amounted to €1.06 billion (2025: €0.02 billion), while Outflows from Repayments and Issuance of Loans amounted to €2.06 billion (2025: €0.07 billion).

Indirect Taxes increased by €0.12 billion (7%) compared to 2025, mainly due to the increase in VAT revenues by €0.14 billion (2026: €1.42 billion, 2025: €1.28 billion). Direct Taxes increased by €0.11 billion (8%) compared to 2025, due to the increase in Income Tax for Legal and Natural Persons by €0.11 billion (2026: €1.29 billion, 2025: €1.18 billion).

Breakdown of State Expenditures

The implementation by the end of May 2026 for expenditures on salaries, pensions, and allowances showed a slight decrease of €0.01 billion (2026: €1.35 billion, 2025: €1.36 billion).

Regarding social benefits expenditures by the end of May 2026, they amounted to €0.82 billion, compared to €0.78 billion in 2025.

The Treasury notes that the increase of €0.04 billion (5%) is mainly due to the strengthening of expenditures for health, education, and housing benefits, by €0.02 billion, €0.01 billion, and €0.01 billion respectively.

Transfers and grants by the end of May 2026 amounted to €0.79 billion (2025: €0.72 billion), showing an increase of €0.07 billion (10%) compared to 2025, mainly due to the increase in own resource gross national income by €0.05 billion (2026: €0.15 billion, 2025: €0.10 billion) and the increase in the General Government Contribution to the Social Insurance Fund by €0.02 billion (2026: €0.30 billion, 2025: €0.28 billion).

The implementation for operational and other expenditures by the end of May 2026 amounted to €0.33 billion (2025: €0.29 billion). The increase of €0.04 billion is mainly due to the increase in Defense and Policing expenditures by €0.02 billion (2026: €0.1 billion, 2025: €0.08 billion), Treasury notes.

Moreover, by the end of May 2026, Financing Expenditures were made, including payable interest and expenses amounting to €0.21 billion (2025: €0.20 billion).

Loan Activity and Foreign Debt Repayments

The Withdrawals of Loans and Repayments of Issued Loans by the end of May 2026 amounted to €1.06 billion (2025: €0.02 billion). The Treasury reports that the increase observed compared to the corresponding period last year is due to the different timing of loan withdrawals (EMTNs).

The Repayments of Loans and the Issuance of Loans to third parties by the end of May 2026 amounted to €2.06 billion (2025: €0.07 billion), of which €2.02 billion relates to the repayment of foreign loans (2025: €0.02 billion), and €0.04 billion to the repayment of domestic loans (2025: €0.05 billion).

Accelerated Capital and Development Expenditures

Regarding the implementation of capital expenditures, by the end of May it reached €111.3 million and, according to the Treasury, is mainly due to expenditures for the road network, construction projects, improvement of government buildings, equipment, purchase of other assets, school buildings, sewage and water systems.

Regarding co-financed projects and other financial expenditures, it is reported that the implementation by the end of May amounted to €83.9 million.

Regarding grants, contributions, and subsidies, the implementation by the end of May amounted to €69.7 million, while social benefits amounted to €24.5 million.

As noted by the Treasury, over the last decade, the average implementation of the state budget for development expenditures by May was 17%. The implementation rate for 2026 stands at 19%.

Source: CNA(ΚΥΠΕ)