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Cyprus Government Surplus Rises Amid Elevated Expenditure in Key Sectors

Robust Fiscal Position Despite Increased Spending

Cyprus has demonstrated resilient fiscal management with a general government surplus of €551.2 million from January to May 2025, representing 1.6% of GDP, according to preliminary data released by the Statistical Service of Cyprus (Cystat). This marginal increase from the €542.6 million surplus in the same period of 2024 underscores the nation’s ability to maintain a favorable balance even as spending intensifies across key sectors.

Stronger Revenue Streams Drive the Surplus

The fiscal report highlights a notable boost in total government revenue, which climbed by €310.8 million to reach €5.9 billion—a 5.6% increase compared to the corresponding period in 2024. Income and wealth taxes led the charge, surging by 11.1% to €1.37 billion, while social contributions increased by 8.8% to €1.96 billion. Remarkably, property income more than doubled, rising significantly from €41.1 million to €92.8 million, reinforcing the diversified nature of the revenue portfolio.

Balanced Growth in Specific Revenue Categories

Revenues stemming from the sale of goods and services and taxes on production and imports also experienced healthy growth, increasing by 7.8% to €401.5 million and by 1.7% to €1.91 billion, respectively. However, among these, the net VAT collection noted a slight decline of 1.0%, reflecting modest adjustments in this segment. Conversely, current and capital transfers saw significant downturns, dropping 36.4% and 60.5%, respectively, suggesting a strategic focus on direct revenue enhancements.

Expenditure Expansion and Strategic Allocation

On the expenditure front, government spending rose by 6% to €5.35 billion compared with the previous year. Increased compensation for employees, social benefits, and intermediate consumption indicate targeted investments in the country’s workforce and social infrastructure. Moreover, the capital account expanded robustly by 27.7%, driven by an 18.0% rise in gross capital formation and nearly doubling of other capital expenditures, signaling ongoing commitments to long-term capital projects.

Conclusion: A Delicate Fiscal Balance

The fiscal trajectory reported by Cystat reflects a balanced approach: while key revenue streams are strengthening and contributing to a surplus, rising expenditures and selective cuts in transfer payments illustrate deliberate fiscal recalibration. This dynamic suggests a government focused on sustainable growth and the strategic management of public resources, even in a challenging economic milieu.

AI Adoption Makes Employee Performance Harder To Assess, Survey Finds

Companies have rapidly adopted AI tools to improve productivity, but the technology is creating new challenges for managers, who say it is becoming harder to evaluate work, supervise teams and maintain control.

More than half of senior leaders surveyed said assessing employee performance had become more difficult since their organisations adopted AI, according to a Nielsen survey of 1,700 directors and senior managers across seven countries, commissioned by work-management software company Monday.com.

AI Makes Performance Harder To Measure

AI allows employees to produce polished work more quickly, making it harder for managers to distinguish between human effort and machine-generated output. Nearly half of respondents said they now spend more time reviewing and guiding their teams’ work.

Despite these challenges, enthusiasm remains high: 94% said they were excited about using AI to improve work.

Michal Miller Levi, head of market research and customer insights at Monday.com, said organisations were struggling to adapt their processes at the same pace as the technology.

“AI works very well for [managers] individually, but they also have a different role as managers. They need to drive the organization as well […] Their struggle is [due to] the fact that AI is just moving faster than the organizational processes,” she told TechCrunch.

Performance Reviews And AI Bias

AI is also changing how employee performance is evaluated. According to the survey, 78% of respondents had changed their performance criteria since adopting AI, placing greater emphasis on prompt-writing, deciding which tasks to delegate to AI and experimenting with new working methods.

At the same time, AI is increasingly involved in the evaluation process itself. Some 46% of managers said they use AI to inform decisions, while 39% use it to draft performance reviews.

This raises concerns about fairness and algorithmic bias. Research from the Luxembourg Institute of Socio-Economic Research found that, without clear objective standards, large language models tend to rate performance in ways that mirror human evaluators. A separate paper published in early 2025 found that AI models could exhibit biases against Black male candidates, with differences across social groups.

Levi said companies had yet to establish the right frameworks for managing these risks.

AI Adds To Managers’ Workloads

Managers are increasingly responsible for assigning tasks to AI agents, reviewing their output and intervening when systems make mistakes. This creates an additional layer of oversight, or “invisible labour”, on top of their existing responsibilities.

The software environment is also becoming more complex. Some 57% of managers said their organisations now use more tools than before AI adoption, while 51% reported greater interdependence between those tools. Only 29% described their AI infrastructure as fully optimised and centralised.

Rather than consolidating software, many companies are dealing with more applications, integrations and unauthorised AI tools used outside approved systems.

Governance Becomes The Next AI Challenge

The survey suggests that oversight will become even more important as businesses deploy increasingly autonomous AI agents. Some 58% of managers expect to oversee more AI agents than human employees within the next year, while 46% are concerned about losing control over their agents’ actions. Another 35% worry about being held responsible for decisions made by AI.

Levi said managers wanted human involvement in critical tasks and decisions, with AI supporting rather than replacing human judgement.

The findings point to a broader challenge for businesses: boosting productivity is only part of successful AI adoption. Companies also need clear processes, reliable infrastructure and accountability frameworks to ensure that faster output does not come at the expense of effective management.

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