Cyprus deficit drops to €465 million in 2021

Cyprus’ government deficit fell to €465 million at the end of the previous year, reflecting a reduction of €463.87 from 2020, according to a financial report released by the treasury this week.

The deficit reduction has been primarily attributed to increased revenues from direct taxation.

The report was submitted to the House on March 29, 2022, within the period of three months from the end of the previous financial year as determined by the constitution.

In addition, Cyprus’ financial activities in 2021 included new loans, which had a total value of €1.6 billion, as well as loan repayments amounting to € 2.2 billion in total.

According to state treasurer Rea Georgiou, the financial report, originally delivered to the Minister of Finance on March 17, includes a presentation of revenues and expenditures included in the state budget in 2021, as well as a comparison with the real revenue and expenditure recorded in the same financial year, taking into account all supplementary budgets and any credit transfers.

As per the report, the total income for 2021 from operating and investment activities amounted to approximately €7.1 billion, while the corresponding expenditures amounted to €7.6 billion in total.

According to the treasury, after the inclusion of net expenses for the servicing of public debt, net outflows came up to €904 million in 2021, while the same figure stood at €1.587 billion the year before that.

Furthermore, when taking into account all withdrawals and repayments of loans made during 2021, net outflows stood at €1.548 billion, while the same figure stood at €2.08 billion the year before that.

The treasure also added that the reduction in the deficit from operating and investment activities, when compared to the corresponding figures for 2020, is mainly due to increased revenues from direct taxation and an increase recorded in other revenues.

Regarding revenue from direct taxation, this stood at €2.659 billion in 2021, while the same figure stood at €1.940 billion the year before that.

Other revenue streams yielded €1.265 billion in 2021, €358 million higher than in 2020.

Taxation remains the key source of revenue for the state which currently stands at €5.83 billion.

Also, taxation represents 82.2 per cent of all revenues stemming from operating and investment activities.

The main categories of government expenditures are transfers with €3.6 billion, as well as personnel expenditures, pensions and bonuses with €2.79 billion.

Transfers mainly concern sponsorships and contributions of the state to various organisations, including public law organisations, local authorities, and the European Union, as well as natural persons, including social benefits, such as the state’s contribution to the General Health System (Gesy).

Finally, the treasury noted that the amount of public debt, excluding the €9.3 billion in intra-government borrowing (€300 million up from 2020), stood at €24 billion on December 31, €700 million down from 2020.