Cyprus recorded a €1.61 billion general government surplus in the first nine months of 2026, an increase of €442.1 million compared with the same period last year, according to preliminary figures released on Tuesday by the statistical service (Cystat).

The surplus reached 4 per cent of GDP between January and September 2026, compared with €1.17bn, representing 3 per cent of GDP, during the corresponding period of 2025.

The improvement came as government revenue increased considerably faster than expenditure, supported mainly by higher receipts from income taxes, social contributions and VAT.

Total government revenue rose by €737.9m to €12.09bn, marking a 6.5 per cent increase from €11.35bn in the first nine months of 2025.

Revenue from taxes on income and wealth recorded the largest increase, climbing by €442.2m to €3.34bn, up 15.3 per cent from €2.89bn a year earlier.

Social contributions also increased by 6.6 per cent, adding €235m to reach €3.78bn, compared with €3.54bn during the corresponding period of 2025.

Meanwhile, taxes on production and imports rose by €251.5m to €3.77bn, representing a 7.2 per cent increase from €3.51bn.

Within this category, net VAT revenue increased by 12.5 per cent to €2.64bn, up €293.1m from €2.35bn a year earlier.

The increase in tax receipts was partly offset by declines in several other sources of government income.

Other current revenue fell by €116.1m to €1.11bn, a decline of 9.4 per cent from €1.23bn in the corresponding period of 2025.

Capital transfers also dropped considerably, falling by 43.6 per cent to €96.7m from €171.3m, a reduction of €74.6m.

Revenue from the sale of goods and services decreased by €7.6m to €743.5m, down 1 per cent from €751.1m a year earlier.

Property income recorded a sharper decline of 28.6 per cent, falling by €37m to €92.4m from €129.4m.

Current transfers also dropped by €71.6m to €278.2m, representing a 20.5 per cent decrease from €349.8m during the corresponding period of 2025.

On the expenditure side, total government spending increased by €295.9m to €10.48bn, marking a 2.9 per cent rise from €10.19bn a year earlier.

The relatively modest increase in overall spending, however, concealed a considerably sharper rise in day-to-day government expenditure.

Total current expenditure increased by 5.4 per cent to €9.55bn, up €485.8m from €9.06bn in the first nine months of 2025.

This was partly offset by a substantial reduction in capital expenditure, which helped keep the overall increase in government spending below 3 per cent.

Intermediate consumption, which covers goods and services used in government operations, increased by €114.3m to €1.16bn, representing an 11 per cent rise from €1.04bn.

Compensation of employees, including imputed social contributions and civil servants’ pensions, rose by 3.8 per cent to €2.99bn, an increase of €108.3m from €2.88bn in 2025.

Social benefits remained the largest expenditure category, increasing by €199.6m to €4.27bn, up 4.9 per cent from €4.07bn a year earlier.

Interest payments also increased by 2.6 per cent, reaching €340.7m compared with €332m during the corresponding period of 2025, a rise of €8.7m.

Current transfers on the expenditure side climbed by €68.7m to €714.7m, marking a 10.6 per cent increase from €646m.

By contrast, the government’s capital spending moved in the opposite direction, providing one of the clearest explanations for the slower growth in overall expenditure.

Spending through the capital account fell by €189.9m to €936.2m, a decline of 16.9 per cent from €1.13bn during the first nine months of 2025.

Within this category, gross capital formation decreased by 12.1 per cent to €686.4m, down €94.1m from €780.5m.

Excluding land annexations, gross capital formation declined by €86.2m to €673.3m, marking an 11.4 per cent reduction from €759.5m a year earlier.

Other capital expenditure fell by 27.7 per cent to €249.8m, a decrease of €95.8m from €345.6m in the corresponding period of 2025.

Government subsidies also declined by €13.9m to €75.8m, down 15.5 per cent from €89.7m.

The distinction between current and capital expenditure is particularly significant.

Although the government’s regular spending commitments continued to grow, with higher outlays on social benefits, public-sector compensation and operating costs, the €189.9m reduction in capital expenditure offset a substantial part of those increases.

In effect, current spending rose by almost €486m, but the fall in capital expenditure brought the overall increase in government spending down to approximately €296m.

A breakdown of the fiscal results by government subsector showed that central government recorded a surplus of €656.3m, more than double the €306.8m registered during the corresponding period of 2025.

The Social Security Funds also remained in surplus, recording €957.2m compared with €891.5m a year earlier.

Local government, by contrast, continued to record a deficit, although this narrowed considerably to €3.8m, from €30.7m in the first nine months of 2025.

The improvement in the overall fiscal balance was therefore supported by stronger results from central government and the Social Security Funds, alongside a smaller deficit at local government level.

The latest figures follow earlier Cystat results showing that Cyprus had recorded a €1.59bn surplus during the first eight months of 2026, equivalent to 4.1 per cent of GDP.

The nine-month results place the surplus at €1.61bn, with the additional month bringing the cumulative total slightly higher.

Cystat cautioned that the figures remain preliminary, as estimates were necessary for several general government entities.

In particular, the statistical service explained that estimates had been produced for the local government subsector because the competent authorities had not submitted sufficient information.

The figures cover the entire general government sector, including central government, local authorities and Social Security Funds, rather than the central government budget alone.

Overall, the results show that Cyprus maintained a substantial fiscal surplus during the first nine months of 2026, with stronger tax receipts providing the main support.

However, the figures also reveal a notable difference in the direction of public spending, with current expenditure rising by 5.4 per cent at the same time as capital expenditure fell by 16.9 per cent.