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Cyprus

Cyprus records deficit of €800m in Q2 due to pandemic

The general government posted a deficit of €800 million during the period of April – June 2020 compared with a surplus of €140 million in the respective period last year, according to data released Friday by the statistical service Cystat.

The second quarter 2020 included a full month of lockdown imposed as part of the measures to contain the spread of the coronavirus, while government spending increased in the context of measures to support the economy.

According to Cystat, on the basis of the preliminary data on the general government accounts for April-June 2020, which are compiled in accordance to EU definitions, total revenue amounted to €1.58bn while total expenditure reached €2.38bn.

The deficit for Q2 2020 reached €800m compared with a surplus of €140.4m in the second quarter of the previous year, resulting in annual deterioration of €940m.

The main categories of revenue for April-June 2020 were taxes on production and imports €631.3m (-27.1 per cent compared with the second quarter of 2019), of which net VAT was €446.2m (-20,5 per cent), taxes on income and wealth €261.4m (-20.2 per cent) and social contributions €484.5m (-19.0 per cent).
Revenue from the sale of goods and services was limited to €131.8m registering a decrease of 22.1 per cent compared with the corresponding period of 2019.

The main categories of expenditure for April-June 2020 were social transfers €761.2m (+3.7 per cent compared with the corresponding period of 2019) and compensation of employees (including imputed social contributions and pensions of civil servants) €641.1m (+3,3 per cent).

The capital account recorded an expenditure of €87.6m (€74.1m investments and €13.5m capital transfers) as compared with €107.3m during the corresponding quarter of 2019 (€95.7m investments and €11.6m capital transfers) registering a decrease of 18.4 per cent. Intermediate consumption reached €331.0m (+40.6 per cent compared with the corresponding period of the previous year). Subsidies increased by €284.6m and amounted to €296.6m, compared with €12.0m in the corresponding quarter of 2019.

The increase in expenditure and the decrease in revenue for April-June 2020 were mainly due to the measures taken to support enterprises and the suspension of various sectors of the economy, respectively, as a result of the pandemic, Cystat said.

Increased amounts in specific categories of revenue and expenditure are partly attributed to the implementation of the second stage of the National Health System as of June 1, 2020.

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