Fiscal deficit on right track

The Ministry of Finance (MoF) reported that the fiscal deficit during the first eight months of 2006 worsened marginally to CYP 34.6 mln from CYP 27.1 mln in the same period a year ago, but excluding extraordinary receipts of 2005, the actual situation improved. As a  percentage of GDP, the fiscal deficit reached 0.4% in the period Jan. – August compared 0.3% of GDP in the same period a year ago.  

The Ministry clarified that last year’s figures include the dividend received from CYTA amounting to CYP 35 mln as well as proceeds from the tax amnesty funds amounting to CYP 98 mln.

Readjusting for the above, fiscal deficit for the 2006 period improves to 0.4% of GDP from a deficit of 2.1% of GDP in the corresponding 2005 period.

According to the Ministry of Finance, public debt for the period January – August 2006 improved to 69.1% of GDP from 71.7% in the corresponding 2005 period. Consequently, the MoF argues that current trends support the government’s targets for a fiscal deficit and a public debt of 1.9% and 67.0% of GDP by the end of 2006.

Total revenue for the period amounted to CYP 1,927.5 mln (+6.4% YoY), while total expenditure for the same period reached CYP 1,962.1 mln (+6.7% YoY).

According to the Ministry of Finance, fiscal deficit for 2006 is expected to reach 1.9%, whilst the EU forecasts the deficit to reach 2.1%.