The government balance in Cyprus for January-April 2024 had a surplus of €665.2 million, almost double compared to the same period in 2023. This surplus was due to an increase in revenues outpacing expenditures, giving the Government more flexibility in its social policy.
Fiscal Results and Surplus Details
Preliminary fiscal results prepared by the Statistical Service for the period of January-April 2024 indicate a surplus of the general government amounting to €665.2 million (2.1% of GDP), compared to a surplus of €391 million (1.3% of GDP) for the same period in 2023. The primary surplus amounts to €807.8 million, up from €496 million in the same period of 2023, and arises when revenues exceed expenditures, excluding debt servicing.
The data from the Statistical Service were announced shortly before the end of measures to combat inflation, which will be in effect until the end of June (zero VAT on certain products and subsidization of electricity), and the surplus in the treasury provides fiscal leeway for the Ministry of Finance to evaluate the data and extend or modify the measures.
Government’s Response and Future Measures
Two days ago, Government Spokesperson Constantinos Letymbiotis, in light of positive remarks from the International Monetary Fund and considering the imminent expiration of inflation-fighting support measures, stated that the Government, in accordance with fiscal data, would evaluate any additional or modified measures already taken.
Revenue and Expenditure Analysis
Regarding the data announced by the Statistical Service, total revenues during January-April 2024 increased by €650.3 million (+17.3%) to €4,415.1 million, compared to €3,764.8 million in the same period of 2023. Total expenditures during January-April 2024 increased by €376.2 million (+11.1%) to €3,749.9 million, compared to €3,373.8 million in the same period of 2023.
IMF Projections and Future Outlook
According to the recent report published by the IMF (Fiscal Monitor), Cyprus is expected to have a higher fiscal and primary surplus in 2024 compared to the October 2023 estimates, while public debt is projected to decrease.
The IMF estimates a surplus of 2.9% in 2023, up from the previous estimate of 1.9%, and in 2024, it is expected to reach 2.5%, up from the October estimate of 1.7%. In the stability program submitted by Cyprus to the EU, it is stated that as a percentage of GDP, the fiscal balance of the general government is expected to decrease by approximately 0.3 percentage points compared to 2023, reaching 2.9%, while the primary balance is estimated to be 4.3% of GDP compared to 4.5% in the previous year.
In 2025, the fiscal position is projected to remain positive, with the fiscal balance at 3.8% of GDP, slightly declining to around 2.4% of GDP in the period 2026-2027, on average.
