…state finances improve as revenue jumps 7%
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State finances improved in the first nine months of the year, recording a surplus of CYP 3 mln in the January-September 2006 period compared to a CYP 9.9 mln deficit in the same period a year ago, according to Finance Ministry data as total revenue increased by 7% YoY while total expenses were up 6.3%.
The Finance Ministry said the surplus represents 0.04% of GDP for the 9M06 period compared to a 0.10% deficit in the same period a year ago. The Ministry pointed out that state finances showed an even better performance if the extraordinary CYP 35 mln in special dividend from CYTA and CYP 98 mln in revenue from the tax amnesty held in 2005 are excluded.
In such a case, the improvement amonts to 1.7 basis points, or a surplus of 0.4% of GDP compared to a deficit of 1.8% in the first nine months of 2005.
The Ministry revealed that public debt continued to decline and was restricted to 66.2% of GDP from 70.1% a year ago in the same period and is confident that its objective of reducing the fiscal deficit to 1.9% of GDP and the public debt to 67% of GDP are feasible.
Total expenses increased by 6.3% YoY to CYP 2.2 bln from CYP 2.07 bln a year ago in the same 9M period. Salaries and wages were up 8.9% to CYP 620.7 mln, mostly on the back of the 2.9% increase in COLA and backdated wage increases to January 1, 2006.
State purchases of goods and services surged by 24.1% to CYP 169.3 mln mostly as a result of purchase of pharmacies and other medical equipment while the reduction in interest rates helped keep finance costs in check, rising 0.9% to CYP 292.4 mln.
Contributions to the Social Insurance Fund were up 0.3% to CYP 347.9 mln.
Total revenue in the first nine months of 2006 increased by 7% YoY to CYP 2.208 mln from CYP 2.064 mln in the same period a year ago with tax receipts up 9.1% to CYP 1.888 mln while excluding last year’s tax amnesty, the increase in tax revenue is 15%.
VAT receipts were up 11% at CYP 571.8 mln from CYP 515.2 mln but are seen higher in the second half of the year as the VAT rate was increased from 5% to 8% for hotels and restaurants.
Revenue from capital gains taxes surged by 105.% to CYP 105.7 mln from CYP 79.2 mln on the back of increased activity in the real estate sector. Indirect taxes were up 9.7% at CYP 984.5 mln while consumer related taxes were up 1.2% at CYP 258.8 mln.
Contributions to the Social Insurance Fund were up 8.1% to CYP 278.6 mln from CYP 257.7 mln a year ago.
