Cyprus fiscal deficit at 0.8% of GDP

Cyprus fiscal deficit in the first half of 2006 amounted to CYP 66.1 mln or 0.8% of GDP compared to a surplus of CYP 28.8 mln or 0.4% of GDP in the first half of 2005, the Ministry of Finance announced.

Excluding extraordinary and non-recurring items such as the CYP 35 mln dividend from CYTA and the tax amnesty revenue of CYP 98 mln, state finances actually showed an improvement, since the fiscal deficit declined from 1.3% of GDP to 0.8% GDP in the first half of 2006. The Ministry of Finance has a target of the fiscal deficit declining to 1.9% of GDP for the whole of 2006.

Part of the blame for the CYP 66.1 mln in deficit during the first half of 2006 is due to a huge jump in expenses, which reached CYP 1.41 bln from CYP 1.31 bln, up 7.6% mostly as a result of an increase in civil servants wages bill, while state revenue was up 0.4% year-on-year to CYP 1.35 bln from CYP 1.34 bln a year ago in the same period.

Public debt was contained at 67.8% of GDP from 69.5% of GDP in the first half of 2005, on track to meet the government’s target of 67% of GDP for 2006.