Cyprus 2007 fiscal accounts confirm big surplus, fall in debt

The final general government accounts for 2007 confirm that the government recorded a large fiscal surplus in 2007 and cut debt by almost EUR 70 mln.
The fiscal balance shifted from a deficit of EUR 172.5 mln (1.2% of GDP) in 2006 to an unprecedented surplus of EUR 537.4 million (3.5% of GDP).
General government consolidated gross debt fell from EUR 9.33bln (64.6% of GDP) in 2006 to EUR 9.26 bln (59.5% of GDP) in 2007.
One of the main reasons this was achieved was a 40% jump in “taxes on income and wealth” and a 21% leap in “taxes on production and imports”, thanks to strong economic growth and what was then a booming housing sector.
At the same time, the previous government kept the reins on spending, which rose by only 6.5%.
The government plans another (smaller) surplus in 2008. But with the property market weakening and the new government increasing spending, this may be the first and last time Cyprus records a budget surplus for many years.

Fiona Mullen