State budget execution reaches 35 per cent for revenue by May

The Treasury on Monday released data showing that the implementation of the state budget up to the end of May 2026 reached 35 per cent for revenue and 32 per cent for expenditure.

Specifically, revenue totalled €3.8 billion at the end of May 2026, matching the 35 per cent mark recorded during the same period in 2025 when revenue stood at €3.59 billion.

Actual expenditure reached €3.7bn, corresponding to an implementation rate of 32 per cent, compared to €3.54bn or 32 per cent in 2025.

The Treasury report that total revenue has increased compared to last year, primarily driven by a rise in proceeds from indirect and direct taxes by €120 million and €110 million respectively.

Indirect taxes grew by €120m, or 7 per cent, largely due to an increase in value-added tax receipts which rose to €1.42bn from €1.28bn in 2025.

Direct taxes also saw an 8 per cent increase, with income tax from legal entities and individuals rising by €110m to reach €1.29bn.

The Treasury reported that the higher implementation of expenditure is mainly attributed to increased spending on transfers and subsidies by €70m, social benefits by €40m, and operational costs by €40m.

Expenditure for salaries, pensions, and gratuities showed a minor decrease of €10m, falling to €1.35bn from the previous year.

Regarding social benefits, the Treasury indicated that spending rose by €40m or 5 per cent compared to 2025, reaching €820m.

This increase was primarily due to higher spending on health, education, and housing support, which rose by €20m, €10m, and €10m respectively.

Spending on transfers and subsidies reached €790m, representing a 10 per cent increase over the previous year, influenced by higher national income contributions and payments to the Social Insurance Fund.

Operational and other expenses increased to €330m, with the Treasury attributing €20m of this rise to higher spending on defence and policing.

Financing expenses, including interest payments, remained largely stable at €210m.

In terms of capital expenditure for development, implementation reached €111.3m by the end of May.

These funds were directed towards road networks, construction works, government buildings, and equipment purchases.

The Treasury highlighted that the average implementation rate for development expenditure over the last decade during the first five months was 17 per cent, whereas the rate for 2026 has reached 19 per cent.

Regarding loan activities, inflows from repayments reached €1.06bn, while outflows for loan repayments and issuance totalled €2.06bn.

The Treasury explained that the significant variance in loan figures compared to 2025 is due to the different timing of the issuance of European Medium Term Notes.

Co-funded projects and other financial disbursements reached €83.9m, covering various schemes including industrial technology, educational subsidies, and sustainable urban mobility.

Sponsorships and contributions to academic and research institutions, such as the University of Cyprus and the Cyprus University of Technology, amounted to €69.7m.

Finally, social benefits totalling €24.5m were distributed, including €20m for education, €2.6m for cultural support, and €1.2m for housing assistance.