Newsroom
Cyprus carried out most of its 2025 state budget as planned, according to a Treasury report released Tuesday. The government collected about 87% of the revenue it had budgeted and spent roughly 92% of what it had planned.
Key figures
Government income for 2025 totaled €10.20 billion. That is lower than in 2024, when revenues reached €10.81 billion and covered 96% of the budget target.
Public spending came to €11.99 billion, slightly below the €12.42 billion recorded the year before. Despite the drop, the spending execution rate improved to 92%, compared with 91% in 2024. Over the past decade, the Treasury noted, government spending has typically been implemented at around 91%.
Why revenues fell
The main reason income was lower was a sharp drop in money raised through loans, which fell by €1.07 billion. However, tax receipts helped soften the decline:
- Direct taxes rose by €0.37 billion
- Indirect taxes increased by €0.17 billion
Indirect tax growth was driven largely by higher VAT collections, which climbed to €3.16 billion from €3.08 billion in 2024. Excise duties and other indirect taxes also edged up.
Direct tax revenue improved mainly because corporate and personal income taxes brought in €3.79 billion, up from €3.47 billion a year earlier.
Loan proceeds were unusually low in 2025, just €0.10 billion versus €1.17 billion in 2024, because a €1 billion loan originally planned for December 2025 was instead taken in January 2026.
Why spending dipped slightly
Overall expenditures were a bit lower mainly because the government paid back less debt. Loan and interest repayments fell to €2.54 billion from €3.38 billion in 2024.
Breaking that down:
- €1.63 billion went to repaying foreign loans
- €0.72 billion covered interest and borrowing costs
- €0.19 billion repaid domestic loans
Where money increased
Some spending areas did grow:
- Social benefits reached €2.02 billion, up 5%
- Transfers and grants rose to €1.93 billion, an 11% increase
The rise in social benefits was mostly due to higher healthcare payments and a larger contribution to the Renewable Energy Sources Fund. At the same time, traditional welfare payments dipped slightly.
Other spending changes
- Wages, pensions and gratuities edged down to €3.52 billion.
- Operating expenses slipped slightly to €1.12 billion.
- Capital spending reached €469.3 million.
- Co-funded projects accounted for €336.3 million.
- Grants, contributions and subsidies totaled €245.9 million.
Overall, the government largely followed its 2025 budget plan, spending most of what was allocated while revenue fell short mainly because of lower borrowing rather than weaker tax income.
