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Cyprus Achieves a Remarkable Fiscal Surplus in the First Half of 2024

economy fiscal surplus

In the first half of 2024, Cyprus accomplished a fiscal surplus of €590.6 million, marking 1.9% of its GDP, a significant increase from the previous year. This achievement reflects the country’s economic resilience and prudent fiscal strategies amidst global challenges, showcasing its financial strength in uncertain times.

What is the fiscal surplus of Cyprus in the first half of 2024?

Cyprus achieved a fiscal surplus of €590.6 million in the first half of 2024, which is 1.9% of its GDP. This marks a significant increase from the previous year’s surplus of 1.1% of the GDP, reflecting the country’s economic resilience and fiscal prudence amidst global challenges.

Economic Resilience Amidst Global Challenges

In an era when the pulse of the economy beats with uncertainty, Cyprus has emerged with promising news. The island nation has recorded a remarkable fiscal surplus of €590.6 million, which is a considerable 1.9 per cent of its Gross Domestic Product (GDP). This achievement is particularly notable when compared to the previous year’s figures during the same January to May window, where the surplus was at 1.1 per cent of the GDP. Such a financial position reflects the strength and resilience of the Cypriot economy in the face of global economic headwinds.

The state’s statistical service, in its preliminary fiscal results, highlighted this significant growth, showing a leap from the €322.7 million surplus reported in the preceding year. Despite encountering higher expenditures, Cyprus has maintained fiscal stability, largely due to the surges in revenue, with considerable contributions from taxes and social security payments.

A Closer Look at Revenue and Expenditure

Delving into the financial specifics, Cyprus’s total revenue saw an impressive climb by 14.9 per cent, which translates to an extra €700.8 million, culminating in a total revenue of €5.39 billion. This growth is substantially higher than the €4.69 billion generated in the previous year. Tax revenues played a significant role in this uplift, with taxes on production and imports alone growing by 8.4 per cent to €1.89 billion. Notably, the Value-Added Tax (VAT) collections have risen by 8.9 per cent, reaching €1.29 billion.

Income and wealth taxes experienced a remarkable increase of 17.2 per cent, amounting to €1.23 billion. The trend of rising revenues continued with social contributions, which saw an ascent of 16.6 per cent to €1.68 billion. Income from services also made a substantial leap, marking a 35.4 per cent increase to €366.8 million. Current and capital transfers were not left behind, registering increases of 19.9 per cent and 50.3 per cent, respectively.

On the expenditure side, the government’s spending witnessed an uptick of 9.9 per cent or €432.8 million, pushing the total expenses to €4.80 billion. The primary contributors to this increase were staff compensations and social benefits, which saw adjustments upward of 13.8 per cent and 9.3 per cent, respectively. Moreover, the domains of current transfers and interest payments also saw substantial hikes.

Investments and Capital Expenditures

Despite the general upswing in spending, it’s worth noting that not all sectors followed the trend. The capital account, which encompasses investments in infrastructure and other long-term assets, exhibited a downturn. It recorded a decline of 13.2 per cent, equating to a decrease of €42.2 million, and settled at €276.4 million, from a higher €318.6 million the previous year. This descent was significantly influenced by a reduction in fixed capital investments, which dropped by 16.3 per cent to €233.1 million, a stark contrast to the €278.4 million recorded in 2023.

Amid these numbers, however, there was a silver lining within the capital expenditures. While fixed investments fell, other areas of capital transfers witnessed a boost of 7.7 per cent, which is a growth by €3.1 million to €43.3 million. Subsidies, which serve as key government support mechanisms, saw a downturn, experiencing a sharp decline of 19.9 per cent to €57.3 million.

Cyprus’s Fiscal Future

Cyprus’s strong fiscal performance, characterized by a combination of increased tax revenues and social contributions against a backdrop of selective expenditure, paints a promising picture of the nation’s financial health. Such a robust surplus positions the country on a stable fiscal path, suggesting economic prudence and a strategic approach to managing its resources. With careful planning and continued prudent fiscal management, Cyprus is poised to maintain its economic stability and possibly set an example for fiscal success in the Mediterranean region.

What is the fiscal surplus of Cyprus in the first half of 2024?

Cyprus achieved a fiscal surplus of €590.6 million in the first half of 2024, which is 1.9% of its GDP. This marks a significant increase from the previous year’s surplus of 1.1% of the GDP, reflecting the country’s economic resilience and fiscal prudence amidst global challenges.

How did Cyprus achieve a fiscal surplus in the first half of 2024?

Cyprus achieved a fiscal surplus in the first half of 2024 through a combination of increased tax revenues, particularly from taxes on production and imports, income and wealth taxes, and social contributions. The country also controlled its expenditures despite a rise in spending, with notable increases in staff compensations and social benefits, ultimately leading to a surplus.

What contributed to the increase in revenue for Cyprus during this period?

The increase in revenue for Cyprus during this period was mainly contributed by taxes on production and imports, income and wealth taxes, social contributions, and income from services. Value-Added Tax (VAT) collections also saw a significant rise. These revenue streams played a crucial role in generating a surplus for the country.

How did Cyprus manage its capital expenditures and investments during this period?

While Cyprus experienced an uptick in overall government spending, there was a decline in capital expenditures, specifically in fixed capital investments. This decrease was offset by a boost in other capital transfers, even though subsidies saw a significant decrease. Overall, Cyprus maintained a balance in managing its investments and expenditures to achieve a fiscal surplus.

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