State budget implementation at 19% for revenue, 15% for expenditure in Q1 2025

By the end of March 2025, the implementation of the state budget, in terms of revenue, reached 19% (€2.22 billion), compared to 18% (€2 billion) in 2024. In terms of actual expenditure, it reached 15% (€1.95 billion), up from 14% (€1.84 billion) in 2024, according to the implementation report prepared by the Treasury of the Republic of Cyprus.

According to the Treasury, the slight increase in revenue compared to last year is mainly due to an increase in indirect and direct taxes by €0.08 billion and €0.10 billion respectively. Similarly, the slight increase in budget implementation in terms of expenditure is attributed to a rise in social benefits by €0.03 billion (2025: €0.39 billion, 2024: €0.36 billion).

More specifically, indirect taxes rose by €0.08 billion (8%) compared to 2024, mainly due to a €0.04 billion increase in VAT revenue (2025: €0.75 billion, 2024: €0.71 billion). Direct taxes increased by €0.10 billion (11%) compared to 2024, mainly due to higher income tax revenue from legal and natural persons (2025: €0.87 billion, 2024: €0.79 billion) and an increase in property tax revenue (2025: €0.06 billion, 2024: €0.04 billion).

By the end of March 2025, loan withdrawals amounted to €0.01 billion.

Regarding wages, pensions, and gratuities, budget implementation at the end of March shows an increase of 7% (€0.05 billion), from €0.76 billion in 2024 to €0.81 billion in 2025.

Loan and interest repayments by the end of March totaled €0.11 billion (2024: €0.12 billion), of which €0.07 billion (2024: €0.08 billion) was for interest and charges, €0.03 billion (2024: €0.04 billion) for domestic loan repayments, €0.01 billion (2024: €0.00 billion) for external loan repayments.

Spending on social benefits reached €0.39 billion (2024: €0.36 billion), with the €0.03 billion (8%) increase mainly due to a rise in social welfare benefits by €0.05 billion (2025: €0.19 billion, 2024: €0.14 billion), a reduction in health benefits by €0.03 billion (2025: €0.13 billion, 2024: €0.16 billion).

Transfers and subsidies up to the end of March reached €0.40 billion (2024: €0.36 billion), an increase of €0.04 billion (11%), mainly due to an increase in the national contribution to gross national income by €0.02 billion (2025: €0.07 billion, 2024: €0.05 billion) and an increase in the General Government Contribution to the Social Insurance Fund by €0.02 billion (2025: €0.17 billion, 2024: €0.15 billion).

Operational and other expenses amounted to €0.15 billion (2024: €0.17 billion).

Capital expenditure implementation by the end of March reached €46.8 million, mainly allocated to road network (€11.3 million), construction, expansion, and improvement of school buildings (€7.4 million), government office buildings (€5.3 million), land and building purchases (€4.5 million), construction works (€4.3 million), fixed and mobile machinery (€2.7 million) and sewerage and water systems (€2.1 million).

Co-funded and other financing expenses reached €42.9 million. Grants, contributions, and subsidies reached €26.2 million, primarily for University of Cyprus (€16.2 million), Cyprus University of Technology (€6.3 million) and Open University of Cyprus (€1.8 million).

Social benefits totaling €11 million were mainly for education benefits, grants to volunteer organisations, cultural grants and housing benefits.

According to the Treasury, over the past decade (excluding 2020), the average implementation rate of total state budget expenditures by the end of March was 17%. The highest implementation rate was in 2020 (27%), mainly due to the early repayment of an IMF loan of €0.71 billion. For 2025, the implementation rate stands at 15%.

Additionally, the average implementation rate for development expenditures by the end of March over the last decade was 8%, matching the 2025 rate.

(Source: CNA)