Breaking news

Cyprus Government Posts Strong Fiscal Metrics Amid Revenue and Expenditure Shifts

by THEFUTURE.TEAM

December 5, 2025

The Cyprus government has reported a robust fiscal performance for the January–October 2025 period, posting a surplus of €1.119 billion, equivalent to 3.1 percent of GDP. This figure, released by the Statistical Service (Cystat), reflects a slight contraction from the €1.3209 billion surplus, or 3.8 percent of GDP, recorded during the same timeframe in 2024.

Revenue Growth Anchored by Diversified Sources

Total government revenue climbed to €12.33 billion, marking an increase of €658.5 million (5.6 percent) compared to last year’s €11.67 billion. This surge was underpinned by notable gains across several revenue streams. Income and wealth taxes rose by €154.6 million (5.3 percent) to €3.05 billion, while social contributions experienced an 8.2 percent increase, adding €296.3 million to reach €3.91 billion.

Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram

Property income delivered an impressive 40.1 percent boost, rising by €38.2 million to €133.5 million. In contrast, taxes on production and imports incrementally increased by 0.2 percent, reaching €3.95 billion, despite a modest decline in net VAT revenue of €24.8 million (0.9 percent) to €2.65 billion.

Additional growth was observed in the sale of goods and services, which surged by €137.4 million (18.7 percent) to €871.3 million, while capital transfers surged by an impressive 64.9 percent, adding €46.2 million to total €117.4 million. However, current transfers receded by 6.7 percent, falling by €21.9 million to €304.6 million.

Escalating Expenditures Reflect Strategic Investments

Expenditure for the period climbed to €11.21 billion, an increase of €860.4 million (8.3 percent) from €10.35 billion recorded in the same period in 2024. Key spending categories registered notable changes. Compensation of employees increased by €201 million (6.7 percent) to €3.20 billion, with social benefits rising by €299.7 million (7.1 percent) to €4.53 billion.

Intermediate consumption grew by €72.5 million (6.6 percent) to €1.18 billion, while interest payments remained stable at €358.7 million. Conversely, subsidies and current transfers contracted, with decreases of €10.7 million (8.3 percent) to €118.5 million and €10.4 million (1.6 percent) to €658.4 million, respectively.

Importantly, the capital account saw a substantive increase of €307.8 million (36 percent) to reach €1.16 billion, driven by a 12.3 percent growth in gross capital formation, totaling €822.3 million, and a doubling of other capital expenditure to €341.5 million. It is worth noting that, for several entities within the general government — particularly the local government subsector — estimates were applied due to incomplete data submissions.

This fiscal report underscores the government’s balanced approach to revenue enhancement and strategic expenditure, reflecting not only immediate gains but also a commitment to longer-term capital investments. Such measures provide a nuanced view into the evolving financial landscape of Cyprus, as policymakers navigate the interplay between revenue sources and fiscal outlays.

The Future Forbes Realty Global Properties

ECB Launches Geopolitical Stress Tests For 110 Eurozone Banks

The European Central Bank is preparing a new round of geopolitical stress tests aimed at assessing potential risks to major financial institutions across the euro area. Up to 110 systemic banks, including institutions in Greece and the Bank of Cyprus, will take part in the exercise, which examines how geopolitical events could affect financial stability.

Timeline And Testing Process

Banks are expected to submit initial data on March 16, 2026. Supervisors will review the information in April, while the final results are scheduled to be published in July 2026. The process forms part of the ECB’s broader supervisory work to evaluate financial system resilience under different risk scenarios.

Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram

Geopolitical Shock As The Primary Concern

The stress tests place particular emphasis on geopolitical risks. These may include armed conflicts, economic sanctions, cyberattacks and energy supply disruptions. Such events can affect banks through changes in market conditions, borrower solvency and sector exposure. Lending portfolios linked to regions or industries affected by geopolitical developments may face higher risk levels.

Reverse Stress Testing: A Tailored Approach

Unlike traditional stress tests that apply the same scenario to all institutions, the reverse stress test requires each bank to define a scenario that could significantly affect its capital position. Banks must identify a geopolitical shock that could reduce their Common Equity Tier 1 (CET1) ratio by at least 300 basis points. Institutions are also expected to assess potential effects on liquidity, funding conditions and broader economic indicators such as GDP and unemployment.

Customized Risk Assessments And Supervisor Collaboration

This methodology allows banks to submit risk assessments based on their own exposures and operational structures. The approach is intended to help supervisors understand how geopolitical events could affect institutions differently and to support discussions between banks and regulators on risk management and contingency planning.

Differentiated Vulnerabilities Across Countries

A joint report by the ECB and the European Systemic Risk Board indicates that countries respond differently to geopolitical shocks. The Russian invasion of Ukraine led to higher energy prices and inflation across Europe, prompting central banks to raise interest rates. Belgium, Italy, the Netherlands, Greece and Austria experienced increases in borrowing costs and lower investor confidence. Germany, France and Portugal recorded more moderate changes, while Spain, Malta, Latvia and Finland showed intermediate levels of exposure.

Conclusion

The geopolitical stress tests will not immediately lead to additional capital requirements for banks. Their results will feed into the Supervisory Review and Evaluation Process (SREP). ECB supervisors may use the findings when assessing capital adequacy, risk management practices and operational resilience at individual institutions.