Cyprus Records 2.8% of GDP Deficit In January-August 2020, Due To Support Measures For COVID-19

09/10/2020

Cyprus recorded a deficit of €581.1 mn (2.8% of GDP) for the period of January-August 2020, as compared to a surplus of €620.8 mn (2.8% of GDP) that was recorded during the period of January-August 2019, according to the preliminary General Government fiscal results, which are prepared by the Statistical Service of Cyprus.

 

EXPENDITURE
--------------------------
During the period of January-August 2020, total expenditure increased by €623.0 mn (+12.0%) and amounted to €5,822.2 mn, compared to €5.199,2 mn in the corresponding period of 2019. It is noted, that this significant increase in expenditure is due to the support measures taken to address the effects of the Covid-19 pandemic on employment, which amounted to €457.6 mn.

 

Specifically, intermediate consumption increased by €268.6 mn (+44.5%) and amounted to €872.4 mn, compared to €603.8 mn in 2019. Social benefits increased by €42.6 mn (+2.4%) and amounted to €1,826.6 mn, compared to €1,784.0 mn in 2019. Compensation of employees (including imputed social contributions and pensions of civil servants) increased by €81.9 mn (+5.0%) and amounted to €1,719.2 mn, compared to €1,637.3 mn in 2019. Subsidies increased by €425.6 mn and amounted to €454.1 mn, compared to €28.5 mn in 2019. The increase in the specific category is mainly attributed to the support measures to enterprises due to the consequences of the Covid-19 pandemic. Current transfers increased by €27.2 mn (+7.9%) and amounted to €370.1 mn, compared to €342.9 mn in 2019.

 

The capital account decreased by €197.9 mn (-43.9%) to €252.5 mn, from €450.4 mn in 2019. This decrease is mainly due to other capital expenditure, which decreased by €264.4 mn (-84.3%) to €49.1 mn, from €313.5 mn in 2019. On the contrary, gross capital formation increased by €66.5 mn (+48.6%) and amounted to €203.4 mn, compared to €136.9 mn in 2019. Interest payable decreased by €25.0 mn (-7.1%) to €327.3 mn, from €352.3 mn in 2019.

 

REVENUE
----------------------
During the period of January-August 2020, total revenue decreased by €578.9 mn (-9.9%) to €5,241.1 mn, compared to €5,820.0 mn in the corresponding period 2019. All revenue categories for the period of January-August 2020 recorded a decrease.

 

In detail, taxes on production and imports decreased by €321.0 mn (-14.4%) to €1,912.6 mn, from €2,233.6 mn in 2019, of which net VAT revenue decreased by €187.5 mn (-13.1%) to €1,246.0 mn, compared to €1,433.5 mn in 2019. Revenue from taxes on income and wealth decreased by €169.2 mn (-12.2%) to €1,216.7 mn, from €1,385.9 mn in 2019. Social contributions decreased by €31.8 mn (-2.1%) to €1,494.1 mn, from €1,525.9 mn in 2019. Property income decreased by €36.8 mn (-55.3%) to €29.8 mn, from €66.6 mn in 2019. Revenue from the sale of goods and services decreased by €7.6 mn (-1.8%) to €414.3 mn, from €421.9 mn in 2019. Current transfers decreased by €9.0 mn (-7.5%) to €111.2 mn, from €120.2 mn in 2019.

 

Increased amounts in specific categories of expenditure are partly attributed to the implementation of the National Health System as of March 1, 2019.