Development expenditures rate in 2024 exceeds average of past decade

The implementation rate of development expenditures in the state budget for the first eight months of 2024 has exceeded the average of the past decade, reaching 34% by the end of August, compared to a historical average of 31%.

In monetary terms, this represents €523.1 million out of a total annual development expenditure budget of €1.52 billion.

According to the August 2024 "Implementation of the State Budget" report published by the Treasury Office of the Republic on Monday, total revenues by the end of August amounted to €6.97 billion, which is equivalent to 62% of the state budget (2023: €6.60 billion, 68%). Actual expenditures reached €7.08 billion, reflecting an implementation rate of 53% (2023: €6.68 billion, 56%).

The Treasury Office noted that revenue performance shows a decline compared to the same period last year (2024:62%, 2023:68%), primarily due to timing differences in the execution of transfers and grants (2024: 12%, 2023: 32%).

Similarly, there is a slight decrease in budget implementation concerning expenditures (2024: 53%, 2023: 56%), mainly due to the timing of public debt repayments (2024: €1.91 billion, 57%; 2023: €1.75 billion, 68%).

The report also highlights that the state budget, prepared on a cash basis, indicates a 16% year-on-year increase in revenues for 2024 (€11.28 billion vs. €9.77 billion in 2023) and a 12% rise in expenditures (€13.45 billion vs. €12 billion in 2023).

The increase in revenues is mainly driven by a €0.68 billion rise in indirect taxes and a €0.61 billion increase in direct taxes. The growth in expenditures is attributed to higher loan and interest repayments, as well as increased outlays for salaries, pensions, and allowances by €0.77 billion and €0.36 billion, respectively.

Revenues Overview

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By the end of August 2024, indirect taxes rose by €0.13 billion (5%) compared to 2023, primarily due to a €0.12 billion increase in VAT revenues (2024: €2 billion, 2023: €1.88 billion).

Direct taxes increased by €0.41 billion (19%) compared to the previous year, mainly due to higher corporate and individual income tax collections (2024: €2.29 billion, 2023: €1.88 billion).

Withdrawals from loans saw a slight decrease of €0.03 billion (3%) compared to the same period in 2023, mainly due to a reduction in long-term foreign loan withdrawals (2024: €1.09 billion, 2023: €1.12 billion).

Expenditure Analysis

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Expenditures for salaries, pensions, and allowances by the end of August showed a 5% increase (€0.09 billion) from €1.95 billion in 2023 to €2.04 billion in 2024.

Loan and interest repayments until August amounted to €1.91 billion (2023: €1.75 billion), with €1.05 billion (2023: €1.04 billion) allocated to foreign loan repayments, €0.52 billion (2023: €0.42 billion) to interest payments, and €0.33 billion (2023: €0.28 billion) to domestic loan repayments.

Social benefits expenditures reached €1.17 billion by the end of August (2023: €1.09 billion), marking a 7% increase. This rise is primarily attributed to a €0.04 billion increase in social welfare benefits (2024: €0.50 billion, 2023: €0.46 billion) and a similar increase in health benefits (2024: €0.50 billion, 2023: €0.46 billion).

Transfers and grants rose to €1.05 billion (2023: €0.96 billion), reflecting a 9% increase, largely due to a higher General Government Contribution to the Social Insurance Fund (€0.41 billion in 2024 vs. €0.36 billion in 2023), as well as increased grants to the University of Cyprus (€0.07 billion vs. €0.05 billion) and the Technological University (€0.04 billion vs. €0.02 billion).

(Source: CNA)