Cyprus budget deficit expands in Q3

The budget deficit expanded in the third quarter, according to EU-compatible preliminary data on the general government accounts.
According to the estimates, the deficit in the third quarter of July-September amounted to EUR 101.9 mln compared with EUR 36.9 mln in the corresponding period of the previous year.
However, last week the finance minister said that based on figures to October, he estimated that the budget deficit should end the year at 5.4% of GDP, compared with 6.1% of GDP in 2009.
This must be because of the performances in earlier quarters.
In the second quarter the budget deficit shrank to EUR 258.7 mln, from EUR 280.0 mln in the second quarter of 2009.
In the first quarter, the budget deficit shrank to EUR 76.5 mln compared with EUR 137.7 mln in the first quarter of 2009.
The budget deficit for the first three quarters of the year, therefore, amounted to EUR 437.1 mln, compared with EUR 454.6 mln in the same period of 2009.
In the third quarter alone, total revenue amounted to EUR 1,833.5 mln (marking 1.9% decrease compared with the corresponding period of 2009), while total expenditure reached EUR 1,935.4 mln (a 1.5% increase).
*The main categories of revenue for the period July-September 2010 were as follows. *Taxes on production and imports: EUR 682.8 mln (0.7% increase), of which VAT was EUR 438.9 mln (5.0% increase).
*Taxes on income and wealth: EUR 572.7 mln (3.4% decrease).
*Revenue from sales of goods and services: 1.1% increase.
The main categories of expenditure for the period July-September 2010 were as follows.
*Compensation of employees: EUR 638.3 mln (0.9% increase).
*Social transfers: EUR 599.9 mln (14.3% increase).
*Current transfers: EUR 158.5 mln (2.1% increase).
*Capital formation: 29.5% decrease.
*Intermediate consumption: 6.8% decrease.

Fiona Mullen
Sapienta Economics Ltd