Cyprus Posts €552.9 Million Budget Surplus in 2026 as Tax Revenue Rises

Cyprus posted a general government fiscal surplus of €552.9 million during the first five months of 2026, equivalent to 1.4% of GDP, according to preliminary figures released by the Cyprus Statistical Service (Cystat).

The strong fiscal performance was supported by higher tax receipts and increased social contributions, which helped offset rising government spending. Although the surplus was slightly lower as a share of GDP than the €544.5 million (1.5% of GDP) recorded during the same period in 2025, the country’s public finances remained resilient.

Total government revenue increased by 4.8% year-on-year to €6.2 billion, driven mainly by stronger collections from income and wealth taxes, which rose 8.4% to €1.49 billion. Social contributions also grew 5.2%, reaching €2.07 billion, while revenue from taxes on production and imports climbed 4.9% to €2.0 billion.

A notable contributor was VAT revenue, which surged 11% to €1.39 billion, reflecting robust domestic economic activity. Revenue from capital transfers and the sale of goods and services also recorded moderate increases, while income from property and current transfers declined compared with the previous year.

On the expenditure side, total government spending rose 5.1% to €5.65 billion. The increase was largely attributed to higher social benefits, employee compensation, current transfers, and interest payments. Social benefits recorded the largest increase in absolute terms, rising to €2.31 billion.

Meanwhile, capital expenditure decreased 6% to €418.7 million, mainly due to lower investment in gross capital formation. Government subsidies also declined compared with the same period in 2025.

Cystat noted that the figures remain preliminary, with estimates used for several general government entities, particularly within the local government sector, pending the submission of complete financial data.

The latest fiscal results highlight Cyprus’ continued budgetary discipline and stable revenue growth, reinforcing confidence in the country’s economic outlook for 2026.