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Cyprus continues to keep its public finances in check, reporting a general government surplus of €551.2 million for the first five months of 2025, slightly higher than the €542.6 million recorded during the same period last year. The figure represents 1.6% of GDP, unchanged from 2024.
According to preliminary data from the Statistical Service, strong tax collection and increased social contributions helped keep the budget in the black, even as government spending also rose.
More money coming in
Total revenues between January and May reached €5.9 billion, up 5.6% compared to last year. The biggest boost came from:
- Income and wealth taxes, which jumped by €137 million (up 11.1%)
- Social insurance contributions, which rose by nearly €160 million (up 8.8%)
- Dividends and interest, which more than doubled to €92.8 million
- Service fees, up by €29 million
There was also a modest increase in production and import taxes, although net VAT revenue actually dipped by 1%, a possible sign of shifts in consumer spending or increased VAT refunds.
On the downside, capital and current transfers to the state both fell sharply, with capital transfers dropping by over 60%.
Spending also up, but still manageable
Expenditures also grew, reaching €5.35 billion, a 6% increase over last year. The biggest spending increases were:
- Wages and pensions for civil servants, up €87 million
- Social benefits, such as pensions and allowances, up €130 million
- Public investment, including infrastructure and other capital projects, which saw an impressive €94 million boost
Subsidies and transfers to other entities were slightly down, offering some balance to the overall rise in costs.
What it means
The government’s ability to post a surplus, even with higher spending, suggests a robust and growing economy, boosted by higher employment and tax compliance. But the drop in VAT revenues and the sharp decline in EU or capital transfers might raise questions going forward.
Still, the overall picture is one of fiscal resilience, offering a solid foundation as Cyprus continues to navigate global economic uncertainty and regional tensions.
