Fiscal indicators improve despite COVID spending

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Cyprus fiscal indicators improved in 2021, despite the government spending millions on furlough schemes and measures to support businesses to address the fallout from COVID-19 restrictions.

The preliminary budget results prepared by the Statistical Service for the period January-December 2021 record a General Government deficit of €409.1 mln (1.8% GDP) compared to a deficit of €1.2 bln (5.6% GDP) recorded in 2020.

The improvement is attributed to the larger increase in revenue relative to expenditure.

According to the Finance Ministry: “The good performance of the economy and the prudent fiscal policy has also led to the improvement of public finances, with the budget deficit for 2021 significantly smaller than originally expected”.

Total revenues in 2021 increased by € 1.36 bln (+16%), amounting to €9.87 bln from €8.51 bln in 2020.

Taxes on production and imports increased by €423.2 mln (+14.6%) reaching €3.32 bln compared to €2.899 bln in 2020, of which VAT net income increased by €329.8 mln (+18.5%) and amounted to €2.11 bln compared to €1.786 bln in 2020.

Revenues from taxes on income and wealth increased by €372.2 mln (+17.7%) reaching €2.47 bln from €2.1 bln.

Social contributions increased by €305.6 mln (+12.7%) to € 2.7 bln from €2.41 bln in 2020.

Capital transfers increased to €318.8 mln compared to €111.6 mln in 2020.

Revenues from the provision of services increased to €686.2mln compared to €638.7 mln in 2020.

Expenditure up 6%

Total expenditures during 2021 increased by €560 mln (+5.8%) amounting to €10.28 bln compared to €9.72 bln in 2020.

State expenditure increased due to government support measures to businesses and employees.

Social benefits increased by €270.6 mln (+7.5%) and amounted to €3.86 bln compared to €3.59 bln in 2020.

Staff remuneration increased by €104.9 mln (+3.6%) to €3 bln from €2.bln.

Grants increased by €7 mln (+1.2%) to €585.2 mln compared to €578.2 mln in 2020.

Current transfers increased by €73.2 mln (+13.6%) to €612.5 mln compared to €539.3 mln in 2020.

Intermediate consumption increased by €134.9 mln (+14.9%) to €1.04 bln compared to €906.7 mln in 2020.

By contrast, interest paid decreased by €26.7 mln (-5.8%), reduced to €431.8 mln from €458.5 mln.