Cyprus records deficit of €800 million in Q2 due to Covid-19 impact

Cyprus General Government posted a deficit of €800 million in the period of April – June 2020 compared to a surplus of €140 million in the respective period of last year, according to data released today by the Cyprus Statistical Service (Cystat).

The second quarter of 2020 included a full month of lockdown imposed as part of the measures to contain the spread of the coronavirus pandemic, while government spending increased in the context of measures to support the economy.
 
According to Cystat, on the basis of the preliminary data on the General Government accounts for April-June 2020, which are compiled in accordance to EU concepts and definitions (ESA 2010), total revenue amounted to €1,585.7 mn, while total expenditure reached €2,386.0 mn.
 
The deficit for Q2 2020 reached €800.3 mn as compared to a surplus of €140.4 mn in the second quarter of the previous year, resulting in annual deterioration of €940 milion.
 
The main categories of revenue for April-June 2020 were taxes on production and imports €631.3 mn (-27.1% compared to the second quarter of 2019), of which net VAT was €446.2 mn (-20,5%), taxes on income and wealth €261.4 mn (-20.2%) and social contributions €484.5 mn (-19.0%).
 
Revenue from the sale of goods and services limited to €131.8 mn registering a decrease of 22.1% as compared to the corresponding period of 2019.
 
The main categories of expenditure for April-June 2020 were social transfers €761.2 mn (+3.7% compared to the corresponding period of 2019) and compensation of employees (including imputed social contributions and pensions of civil servants) €641.1 mn (+3,3%). The capital account recorded an expenditure of €87.6 mn (€74.1 mn investments and €13.5 mn capital transfers) as compared to €107.3 mn during the corresponding quarter of 2019 (€95.7 mn investments and €11.6 mn capital transfers) registering a decrease of 18.4%. Intermediate consumption reached €331.0 mn (+40.6% compared to the corresponding period of the previous year). Subsidies increased by €284.6 mn and amounted to €296.6 mn, compared to €12.0 mn in the corresponding quarter of 2019.
 
The increase in expenditure and the decrease in revenue for April-June 2020 are mainly due to the measures taken to support enterprises and the suspension of various sectors of the economy, respectively, as a result of the Covid-19 pandemic, Cystat said.
 
Increased amounts in specific categories of revenue and expenditure are partly attributed to the implementation of the second stage of the National Health System as of 01.06.2020.