Nicosia: Cyprus recorded a general government fiscal surplus of pound 420.3 million, equivalent to 1.1% of GDP, during the first half of 2026, according to preliminary data released by the Statistical Service of Cyprus on Friday. The surplus was marginally higher than the pound 416.8 million, or 1.1% of GDP, recorded in the corresponding period of 2025.
According to Cyprus News Agency, total government revenue rose by 4.1% year-on-year to pound 7.40 billion from pound 7.11 billion in the first six months of 2025, while total expenditure increased by 4.3% to pound 6.98 billion from pound 6.69 billion. Revenue growth was driven mainly by higher tax receipts and social contributions. Taxes on production and imports increased by pound 207.9 million, or 9.3%, to pound 2.45 billion, with net VAT revenue posting the strongest increase, rising by pound 263.8 million, or 18%, to pound 1.73 billion.
Revenue from taxes on income and wealth increased by pound 101 million, or 6.3%, to pound 1.69 billion, while social contributions rose by pound 181.3 million, or 7.7%, to pound 2.54 billion. On the other hand, capital transfers fell sharply to pound 23 million from pound 107.6 million a year earlier. Revenue from sales of goods and services, interest and dividends received, and current transfers also declined.
On the expenditure side, social benefits increased by pound 151.7 million, or 5.5%, to pound 2.89 billion, while compensation of employees rose by pound 64.9 million, or 3.4%, to pound 1.98 billion. Intermediate consumption recorded the strongest percentage increase among major expenditure categories, rising by 13.4% to pound 745.4 million. Interest payments increased by 4.9% to pound 263.4 million, while current transfers rose by 9.1% to pound 478.4 million.
Capital expenditure declined by 9% to pound 580.8 million, mainly reflecting a 31% drop in other capital transfers. Gross fixed capital formation, however, increased by 2.1% to pound 434 million. By subsector, the central government recorded a deficit of pound 218.6 million compared with a deficit of pound 185 million in the first half of 2025. Local government posted a deficit of pound 14.8 million, compared with pound 16.6 million a year earlier. Social security funds recorded a surplus of pound 653.7 million, up from pound 618.4 million, supporting the overall fiscal balance.