Cyprus Mail
Business Cyprus

Coronavirus: Government deficit inflated by lockdown

The general government deficit – the balance of income and expenditure – at the end of May came to €528.8m (or 2.6 per cent of GDP) as a result of the steep decline in tax revenue during the coronavirus-related lockdown.

This compared to a general government surplus of €201.3m registered for the same period last year, the Statistical Service said.

It said the deficit is due to the drop in tax revenue and customs duties, and the simultaneous increase in welfare spending by the state to prop up businesses and individuals affected by the lockdown.

From January to May this year, total taxes on production and on imports dropped by 15.8 per cent, while net revenues from VAT fell by 10.8 per cent.

The service’s preliminary results in question show that total government expenditure came to €3.462bn, compared to €3.139bn for the same period last year.

Specifically, spending on alleviating the fallout from the lockdown came to €216.1m by the end of May.

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