The implementation rate of development expenses from the state budget stood at 29 per cent at the end of July, according to a report by the Treasury.

This is slightly higher than the ten-year average of 26 per cent for the same period.

This corresponds to a total of €446.1 million out of an annual development expenditure budget of €1.49 billion.  

In terms of overall fiscal performance, total state revenues by the end of July amounted to €5.90bn, representing 52 per cent of the annual budget. This marks a decrease from last year’s 57 per cent for the same period, when total revenues stood at €5.56bn.  

Actual expenditure reached €6.43bn, which corresponds to 48 per cent of the budget compared to 50 per cent in 2023, when expenditure amounted to €6.04bn.  

The decrease in revenue implementation compared to 2023 is attributed primarily to a reduction in indirect tax collection, with the implementation rate dropping from 61 per cent in 2023 to 54 per cent in 2024.  

Likewise, expenditure implementation has decreased slightly, largely due to the timing of public debt repayments. By July 2024, €1.9bn had been repaid, representing 57 per cent of total debt repayment obligations, compared to €1.7bn, 68 per cent, in the same period last year. 

It is noted that the state budget, prepared on a cash basis, shows an increase in both revenues and expenditures, with an expected rise in revenue of 16 per cent (2024: €11.28bn, 2023: €9.77bn) and in expenditure of 13 per cent (2024: €13.5bn, 2023: €12bn).  

The projected revenue increase stems largely from growth in both direct and indirect taxes, which are expected to bring in an additional €0.61bn and €0.68bn, respectively.  

Meanwhile, higher outlays on loan and interest repayments, as well as salaries, pensions, and gratuities, are expected to drive the increase in expenditures by €0.77bn and €0.36bn respectively. 

Looking more closely at revenues up to the end of July, indirect taxes increased by €0.11bn, 5 per cent,  year-on-year, driven mainly by a rise in VAT receipts, which climbed by €0.12bn to €1.75bn (2023: €1.63bn).  

Direct tax revenues, meanwhile, saw an even more pronounced increase of 16 per cent (€0.26bn), primarily due to stronger receipts from corporate and personal income taxes, which amounted to €1.66bn (2023: €1.39bn). 

Borrowings remained steady compared to the same period in 2023, holding at €1.09bn. 

Regarding expenses related to salaries, pensions, and gratuities experienced a 5 per cent increase, rising from €1.70bn in 2023 to €1.78bn in 2024.  

Loan repayments up to the end of July reached €1.89bn (2023: €1.73bn), of which €1.05bn was allocated to foreign loan repayments, €0.51bn to interest payments, and €0.33bn to domestic loan repayments. 

Spending on social benefits amounted to €1.03bn by July, up from €0.96bn the previous year. This increase of 7 per cent is attributed to higher expenditures on social welfare and healthcare benefits.  

Welfare benefits rose by €0.04bn to €0.44bn, while healthcare benefits increased by €0.03bn to €0.42bn. 

Transfers and grants also saw a rise, totalling €0.94bn by the end of July (2023: €0.86bn), a 9 per cent increase.

This was largely driven by a higher contribution to the Social Security Fund, which increased by €0.05bn, and higher sponsorship to educational institutions such as the University of Cyprus and the Cyprus University of Technology.

Operating and other expenses increased modestly, rising by 2 per cent to €0.51bn. 

Focusing on development expenditure, the implementation rate up to July 2024 reached €162.3m. The majority of this spending was directed towards the road network (€55.9m), school infrastructure (€17.8m), and the purchase of land and buildings (€16.9m).  

Additionally, €12.7m was allocated to sewerage and water systems, €10.3m to fixed and mobile equipment, and €6.1m to the construction and improvement of government offices. 

Meanwhile, co-financed projects accounted for €101.1m in development expenditure, including €25.9m for projects implemented by non-governmental organisations, and €20.7m for projects co-financed by Internal Affairs Funds.  

Other notable projects include the Tuition and Meals Subsidy Scheme for children up to 4 years old (€11.6m), the Competitiveness for SMEs project (€9.2m), and energy efficiency programmes aimed at upgrading homes (€5.6m). 

In terms of grants, contributions, and subsidies, €134.3m had been implemented by the end of July, with the majority directed towards the University of Cyprus (€74.4m) and the Cyprus University of Technology (€42.3m).  

Additionally, the Open University of Cyprus received €6.5m, the Institute of Neurology and Genetics €3.8 million, and the Cyprus Institute €2.8m. 

Finally, social benefit implementation stood at €32.4m, with key programmes including the state scholarship programme (€12.8m), grants to voluntary organisations (€9.8m), and educational benefits (€5.1m).