Cyprus generated €300 mln surplus in 2022, helped by higher tax revenues

Cyprus recorded a €300 million surplus from operating and investing activities in 2022, according to the government’s fiscal report for the previous fiscal year, which was recently submitted for review to the House of Representatives.

According to the report, this was the result of increased direct tax revenue of €3.01 billion and indirect tax revenue of €3.57 billion during 2022, compared to €2.65 billion and €3.17 billion respectively in 2021.

Crucially, the rise in tax revenues has reversed the €465 million deficit recorded in the previous year.

Moreover, the treasury of the Republic of Cyprus also reported that the total amount of borrowing, excluding intra-governmental borrowing, decreased by €769 million in 2022 compared to the previous year, falling to €22.73 billion as of December 31, 2022.

The fiscal report includes a presentation of the revenues and expenditures included in the 2022 state budget, compared to the actual revenues and expenditures recorded in the same fiscal year, including any supplementary budgets and credit transfers.

The report noted that revenues from expenses for operational and investment activities exceeded the corresponding expenses in 2022.

According to the report, the main source of state revenue in 2022 was taxation, which constituted 82.4 per cent of revenue from operational and investment activities, amounting to €6.59 billion.

The treasury reported that the main categories of state expenditure were transfers, amounting to €3.37 billion, and staff costs, pensions, and gratuities, amounting to €2.9 billion.

The treasury explained that transfers mainly concerned state sponsorships and contributions to various organisations and natural persons.

Elsewhere in the report, it was reported that revenues from financial activities in 2022 amounted to €1.21 billion, while expenses amounted to €1.95 billion.

The total amount of borrowing as of December 31, 2022, excluding intra-governmental borrowing, was €22.73 billion, compared to €23.49 billion on December 31, 2021, of which €21.48 billion represented foreign loans.

What is more, the report highlighted the reversal of the deficit from operating and investment activities in 2021 to a surplus in 2022, which is mainly attributed to the increased tax revenues.

The report was submitted to the Minister of Finance by accountant general Rea Georgiou on March 23, 2023, and was approved by the Cabinet of Ministers on March 29, 2023, within the deadline of three months from the end of the reference financial year determined by the constitution of the Republic of Cyprus.