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.

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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.

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Bank of Cyprus Upgrade Signals Fresh Optimism For Greek And Cypriot Banks

by THEFUTURE.TEAM

June 26, 2026

Regional Banks Enter A More Favorable Cycle

Bank of Cyprus and Eurobank are well positioned to benefit from a renewed re-rating of Greek and Cypriot bank stocks, according to Cyprus-based investment firm Roemer Capital, which upgraded Bank of Cyprus to a buy rating and reaffirmed its positive view on Eurobank.

The firm cited easing geopolitical tensions, resilient economic growth in Greece and Cyprus, lower funding costs and Greece’s expected transition to developed-market status as the main factors supporting the sector.

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Roemer Capital also lowered its cost of equity assumptions, updated its forecasts following first-quarter 2026 results and extended its valuation horizon to the end of 2027, raising target prices across its banking coverage.

Bank Of Cyprus Gets The Largest Upgrade

Bank of Cyprus received the biggest revision, with Roemer Capital upgrading the stock from hold to buy and setting a target price of €11.10, implying potential total upside of 27%.

The firm highlighted the bank’s strong capital generation, profitability and projected 100% dividend payout, describing it as the strongest capital-return story among the banks under coverage. Roemer Capital maintained its buy rating on Eurobank, assigning a target price of €4.90 and forecasting potential upside of 28%. The report said the bank is well placed to benefit from loan growth, improving operating performance and merger-and-acquisition synergies.

National Bank of Greece and Piraeus Bank also retained buy ratings, with expected returns ranging from 25% to 36%. Optima Bank was upgraded to buy, while Alpha Bank remained at hold on valuation grounds.

Why Growth Still Sets The Region Apart

According to Roemer Capital, Greek and Cypriot banks continue to benefit from stronger economic fundamentals than many western European peers. The report pointed to faster economic growth, healthier balance sheets, low levels of non-performing exposures, capital ratios approaching 20% and strong customer deposit bases.

Analysts expect performing loans across the sector to grow at a compound annual rate of 6% to 8% through 2028, supported by private investment, digitalisation, green manufacturing, supply-chain expansion and a gradual recovery in household lending.

The report also said the conclusion of lending under the EU Recovery and Resilience Facility is unlikely to materially affect credit growth, as banks have already shifted back towards traditional commercial lending. Roemer Capital expects Euribor to remain between 2.2% and 2.5%, a level it believes should support both lending activity and net interest margins.

Geopolitics, Valuation And Market Structure Support The Case

The report said improving geopolitical conditions have strengthened the investment outlook, noting that Brent crude prices have largely returned to pre-war levels while Greek government bond yields have stabilised at around 3.5%. Although geopolitical risks remain, Roemer Capital believes the likelihood of a major inflationary shock or significant pressure on bank profitability has eased.

Another important catalyst identified by the firm is Greece’s expected promotion to developed-market status by FTSE Russell, STOXX and MSCI over the coming months.

According to the report, the reclassification should improve liquidity and attract a broader base of international investors. Roemer Capital also said Euronext’s acquisition of the Athens Exchange is expected to strengthen market infrastructure and increase international visibility, particularly for Bank of Cyprus and Optima Bank.

The firm noted that Bank of Cyprus has already benefited from its Athens listing, with average daily trading value increasing from less than €400,000 before its September 2024 move to nearly €6 million afterwards.

Economic Momentum Remains A Core Tailwind

Roemer Capital said both Greece and Cyprus have moved beyond post-crisis recovery and are now supported by private-sector-led growth. For Cyprus, the report highlighted recent tax reform and efforts to simplify the legal and regulatory framework, while also noting that limited foreign banking competition continues to support domestic lenders.

Overall, Roemer Capital expects Greek and Cypriot banks to remain well-positioned for profitable loan growth over the coming years.

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