Budget surplus in January-May

According to data released by the Ministry of Finance, the budget balance was in surplus to the tune of CYP 100.9 mln in the first five months of 2005, or 1.3% of GDP. This compares with a deficit of CYP 69.2 mln in January-May 2004.

Whether this performance will be maintained for the remainder of the year remains to be seen, since government spending normally accelerates in the second half of the year.

The government is aiming to reduce the general government budget deficit to 2.9% of GDP this year, from 4.1% in 2004.

Budget revenue in the first part of 2005 was largely boosted by the tax amnesty, which netted CYP 70 mln for the 2005 accounts, although income from VAT rose by 6.8%.

Expenditure on wages and salaries rose less quickly than in 2004, thanks to freeze on non-contractual pay increases in the public sector.

Separately, the finance minister reported that real GDP grew by 3.9% in the first half of 2005.