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Budget balance turns negative in 2020 due to pandemic

02/04/2021 09:21

Cyprus posted a budget deficit amounting to €1.13 billion in 2020, compared to a €423 million surplus the year before, reflecting the significant impact of the coronavirus pandemic and the government support measures on the public finances.

According to the Financial Report for 2020 published by Treasury of the Republic, Cyprus public debt in 2020, excluding intergovernmental borrowing amounting to about €9 billion, rose to €24.7 billion in end-2020 compared with €21 billion in the end of 2019.

The Treasury said in 2020 payments for operational and investment activities exceeded revenues with total proceeds for 2020 amounting to €6 billion and payments reaching to €7.1 bln.

The deficit for 2020 amounted to €1,130 million compared wit a surplus of €423 million the year before marking a total deterioration of €1.5 billion.

Including net debt servicing costs, the 2020 budget net outflows amounted to €1,587 million compared with net outflows of €56 million in 2019, while taking into borrowing and debt repayments net inflows rose to €2,083 million in 2020, compared with net inflows of €358 million in 2019.

Welfare spending rose to €1.9 billion due to the pandemic

The Treasury said the deterioration of the public finances is attributed to increased welfare spending which rose to €1,895 million in 2020 compared with €1,274 in 2019 to natural and legal persons affected by the pandemic, while revenue from direct and indirect taxes declined to €5,067 million in 2020 from €5,525 million in 2019.

According to the Treasury Cyprus main source of revenue was taxation with €5,067 million which corresponds to 84,8% of public revenue.

The state's main expenditures in 2020 were social transfers (welfare spending, contribution to local government bodies and the state’s contribution to the General Health Scheme,) with €3,287 million and the state wage bill with €2,758 million, the Treasury added.