General government deficit widens in Q2 2026 despite revenue growth

The general government of Cyprus recorded a fiscal deficit of €142.7 million for the second quarter of 2026, according to preliminary data released by the Statistical Service. This represents an increase compared to the €127.9 million deficit reported during the same period in 2025. The rise in the deficit is attributed to expenditures increasing at a faster rate than revenues, specifically due to higher spending on social benefits and intermediate consumption.

Total revenue for the period reached €3,601.0 million, marking a 2.0% increase of €69.1 million compared to the previous year. This growth was driven by a 19.0% surge in net VAT collections and a 6.9% rise in social contributions, which amounted to €1,258.5 million. Taxes on production and imports also saw significant growth, rising by 8.3% to reach €1,242.3 million.

Analysts note that the deficit figure is partially seasonal, as the state faced increased debt repayment obligations during this specific timeframe. While total revenue showed resilience, the overall fiscal outcome reflects the impact of rising state expenses during the April-to-June quarter.