Government deficit drops to 1.8 per cent of GDP

Cyprus’ government deficit fell to €409.1 million or 1.8 per cent of GDP in 2021 in 2021, primarily due to the impressive 16 per cent increase in revenues, according to a preliminary report released by the Cyprus Statistical Service (Cystat) on Monday.

For comparison, government deficit stood at €1.21 billion or 5.6 per cent of GDP in 2020.

In more detail, total expenses, during the period between January and December 2021, increased by €560 million (5.8 per cent) and amounted to €10.28 billion compared to €9.72 billion in the corresponding period of 2020.

The expenditure increase in certain categories is the result of the various support measures to address the effects of the coronavirus pandemic.

Specifically, social benefits increased by €270.6 million (7.5 per cent) and amounted to €3.86 billion, compared to €3.59 billion in 2020.

Employee earnings (including imputed social contributions and civil servants’ pensions) increased by €104.9 million (3.6 per cent) to reach €3 billion overall, compared to €2.89 billion in 2020.

Grants increased by €7 million (1.2 per cent) and amounted to €585.2 million compared to €578.2 million in 2020, while current transfers increased by €73.2 million (13.6 per cent) and amounted to €612.5 million compared to €539.3 million in 2020.

Intermediate consumption increased by €134.9 million (14.9 per cent) and amounted to €1.04 billion, compared to €0.9 billion in 2020.

Conversely, the interest paid decreased by €26.7 million (5.8 per cent) and was limited to €431.8 million compared to €458.5 million in 2020.

The capital account decreased by €3.8 million (0.5 per cent) and was limited to €747.7 million compared to €751.5 million in 2020.

Fixed capital investments increased by €10.9 million (1.8 per cent) and amounted to €620.1 million compared to €609.2 million in 2020.

Other capital transfers decreased by €14.8 million (10.4 per cent) and were limited to €127.6 million compared to €142.4 million in 2020.

In terms of revenue during the period between January and December 2021, this increased by €1.36 billion (16 per cent) and amounted to €9.87 billion compared to €8.5 billion in the corresponding period of 2020.

Total taxes on production and imports increased by €423.2 million (14.6 per cent) and amounted to €3.32 billion compared to €2.89 billion in 2020.

Of that amount, VAT net income (after deducting refunds) increased by €329.8 million (18.5 per cent) and amounted to €2.11 billion compared to €1.78 billion in 2020.

Revenues from income tax and wealth increased by €372.2 million (17.7 per cent) and amounted to €2.47 billion compared to €2.1 billion in 2020,.

Meanwhile, social contributions increased by €305.6 billion (12.7 per cent) and amounted to €2.7 billion compared to €2.4 billion in 2020.

Furthermore, capital transfers increased by €207.2 million and amounted to €318.8 million compared to €111.6 million in 2020, while current transfers increased by €8 million (3.4 per cent) and amounted to €242.1 million compared to €234.1 million in 2020.

Finally, revenues from the provision of services increased by €47.5 million (7.4 per cent) and amounted to €686.2 million compared to €638.7 million in 2020.