Cyprus development expenditure: 2023 surpasses €1B

The realization of state budget development expenditure in 2023 reached 72% compared to 70% in 2022 and the average of 69% over the last decade, according to a Treasury report released on Wednesday.

Real development expenditure in 2023 reached €1.03 billion compared to €782.11 million in 2022 και €639.54 million in 2021.

According to the Treasury's report the increased implementation of development expenditure in 2023 compared to 2022 is mainly attributed to an increase in capital expenditure due to spending for the road network which reached 85% (2022: 75%). It was also due to spending for construction works which reached 75% (2022: 59%) which mainly concerns a grand to the Natural Gas Public Company (DEFA) to be used as capital for the construction of necessary infrastructure for the transportation of natural gas to Cyprus of the order of €30.5 million. It was further attributed to an increase in the implementation of expenditure for projects which are co-funded by European resources, which reached 66% (2022: 56%).

The implementation of capital expenditure for 2023 reached €474 million including €227 million in co-funded and other funded expenditure, €212 million in grants, contributions and subsidies, €81 million in social security benefits and €43 million in other development expenditure.

The state budget for 2023, which is prepared on a cash basis, shows an increase in income by 14% (2023: €9.77 bln, 2022: €8.56 bln.) and an increase in expenditure of the order of 8% (2023: €12 bln, 2022: €11.14 bln.).

According to the Treasury, the budgeted for increase in income is mainly due to an increase in direct and indirect taxes by €0.96 bln and €0.53 bln, respectively while the budgeted increase in expenditure is aminly due to an increase of €0.24 bln in payroll, pensions, and gratuities.

In relation to the implementation of the state budget, at the end of 2023 total income came to €9.94 bln, which corresponds to 102% of the budget (2022: €9.26 bln, 108%) και real expenditure came to €10.92 bln, which corresponds to an implementation of 91% (2022: €10.16 bln, 91%).

The implementation of the state budget in relation to total expenditure is at the same level as the previous year but has dropped in relation to income.

According to the Treasury's report, indirect taxes were up by €0.5 bln (43%) compared to 2022, mainly due to an increase in income from VAT by €0.42 bln (2023: €2.96 bln, 2022: €2.54 bln).

Direct taxes increased by €0.24 bln (8%) compared to 2022, mainly due to the income tax of legal and natural persons (2023: €2.89 bln, 2022: €2.61 bln).

Loans in 2023 came to €1.14 bln. (2022: €1.15 bln.), of which €0.99 concern an issuance of EurOpean Medium Term Notes (EMTN) of a nominal value of €1 bln, €0.13 bln from loans from the European Investment Bank (EIB) and €0.03 bln from the issuance of bonds for natural persons.

End of year implementation to do with payroll, pensions and gratuities shows an increase of 10% (€0.29 bln), from €2.91 bln in 2022 to €3.20 bln in 2023.

Repayment of debt and interest at the end of 2023 came to €2.53 bln (2022: €2.44 bln), of which €1.1 bln (2022: €1.1 bln) have to do with the repayment of external debt, €0.8 bln concern interest and charges (2022: €0.5 bln) and €0.63 bln (2022: €0.84 bln) concern repayment of home debt.

Social security benefits in 2023 reached €1.8 bln (2022: €1.73 bln). The increase of €0.07 bln (4%) is due to increased expenditure for welfare benefits by €0.04 bln (2023: €0.70 bln, 2022: €0.66 bln) and to increased expenditure for health services by €0.03 bln (2023: €0.76 bln, 2022: €0.73 bln).

According to the Treasure, the budget implementation at the end of year shows an increase of 7% (€0.11 bln) compared to €1.47 bln in 2022 to €1.58 bln in 2023, which is mainly due to an increase in the government contribution to the Social Insurance Fund by €0.7 bln (13%) and the subsidy of the electricity cost to deal with inflationary pressures by €0.03 bln (2023: €0.07 bln, 2022: €0.04 bln).

Operation and other expenditure reached €1.09 bln (2022: €1.11 bln).