Development expenditures rate in 2024 exceeds average of past decade

The implementation rate of development expenditures in the state budget for the first eight months of 2024 has exceeded the average of the past decade, reaching 34% by the end of August, compared to a historical average of 31%. In monetary terms, this represents pound 523.1 million out of a total annual development expenditure budget of pound 1.52 billion.

According to the August 2024 “Implementation of the State Budget” report published by the Treasury Office of the Republic on Monday, total revenues by the end of August amounted to pound 6.97 billion, which is equivalent to 62% of the state budget (2023: pound 6.60 billion, 68%). Actual expenditures reached pound 7.08 billion, reflecting an implementation rate of 53% (2023: pound 6.68 billion, 56%).

The Treasury Office noted that revenue performance shows a decline compared to the same period last year (2024:62%, 2023:68%), primarily due to timing differences in the execution of transfers and grants (2024: 12%, 2023: 32%).

Similarly, there is a slight d
ecrease in budget implementation concerning expenditures (2024: 53%, 2023: 56%), mainly due to the timing of public debt repayments (2024: pound 1.91 billion, 57%; 2023: pound 1.75 billion, 68%).

The report also highlights that the state budget, prepared on a cash basis, indicates a 16% year-on-year increase in revenues for 2024 (pound 11.28 billion vs. pound 9.77 billion in 2023) and a 12% rise in expenditures (pound 13.45 billion vs. pound 12 billion in 2023).

The increase in revenues is mainly driven by a pound 0.68 billion rise in indirect taxes and a pound 0.61 billion increase in direct taxes. The growth in expenditures is attributed to higher loan and interest repayments, as well as increased outlays for salaries, pensions, and allowances by pound 0.77 billion and pound 0.36 billion, respectively.

Revenues Overview

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By the end of August 2024, indirect taxes rose by pound 0.13 billion (5%) compared to 2023, primarily due to a pound 0.12 billion increase in VAT revenues (2024: pound 2 billion, 2
023: pound 1.88 billion).

Direct taxes increased by pound 0.41 billion (19%) compared to the previous year, mainly due to higher corporate and individual income tax collections (2024: pound 2.29 billion, 2023: pound 1.88 billion).

Withdrawals from loans saw a slight decrease of pound 0.03 billion (3%) compared to the same period in 2023, mainly due to a reduction in long-term foreign loan withdrawals (2024: pound 1.09 billion, 2023: pound 1.12 billion).

Expenditure Analysis

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Expenditures for salaries, pensions, and allowances by the end of August showed a 5% increase (pound 0.09 billion) from pound 1.95 billion in 2023 to pound 2.04 billion in 2024.

Loan and interest repayments until August amounted to pound 1.91 billion (2023: pound 1.75 billion), with pound 1.05 billion (2023: pound 1.04 billion) allocated to foreign loan repayments, pound 0.52 billion (2023: pound 0.42 billion) to interest payments, and pound 0.33 billion (2023: pound 0.28 billion) to domestic loan repayments.

Social be
nefits expenditures reached pound 1.17 billion by the end of August (2023: pound 1.09 billion), marking a 7% increase. This rise is primarily attributed to a pound 0.04 billion increase in social welfare benefits (2024: pound 0.50 billion, 2023: pound 0.46 billion) and a similar increase in health benefits (2024: pound 0.50 billion, 2023: pound 0.46 billion).

Transfers and grants rose to pound 1.05 billion (2023: pound 0.96 billion), reflecting a 9% increase, largely due to a higher General Government Contribution to the Social Insurance Fund (pound 0.41 billion in 2024 vs. pound 0.36 billion in 2023), as well as increased grants to the University of Cyprus (pound 0.07 billion vs. pound 0.05 billion) and the Technological University (pound 0.04 billion vs. pound 0.02 billion).

Operational and Other Expenses

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Operational and other expenses until August totaled pound 0.58 billion (2023: pound 0.59 billion), showing a marginal decrease of 2%.

Implementation of Development Expenditures

As reporte
d by the Treasury Office, capital expenditure implementation reached pound 195.7 million by August 2024. Key expenditures include pound 70.1 million for the road network, pound 21.3 million for the construction and improvement of school buildings, pound 18.1 million for the purchase of land and buildings, pound 13.9 million for sewage and water systems, pound 13.5 million for machinery, and pound 8.3 million for the construction and extension of government offices.

Co-funded and other financial expenditures totaled pound 120.6 million, including pound 26.4 million for NGO-led projects, pound 25 million for projects co-funded by the Internal Affairs Funds, pound 13.2 million for the Tuition and Child Care Subsidy Programme for children under 4 years, pound 10.1 million for the SME Competitiveness Programme, pound 6.9 million for European Competitive Programmes, and pound 5.9 million for the Energy Efficiency Housing Programme.

Grants, Contributions, and Subsidies

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Grants, contributions, and subsidies by
the end of August 2024 stood at pound 153.5 million, compared to pound 75.6 million during the same period in 2023 (2024: 59% implementation rate, 2023: 28%).

The discrepancy is mainly due to timing differences in grant provisions, such as the increased grant to the University of Cyprus (pound 74.4 million vs. pound 45.9 million), the Cyprus University of Technology (pound 42.3 million vs. pound 18.7 million), and the Research and Innovation Foundation (pound 15.7 million vs. pound 0).

Other notable grants include those to the Open University of Cyprus (pound 6.5 million vs. pound 2.7 million), the Cyprus Institute (pound 6.2 million vs. pound 1.6 million), and the Institute of Neurology and Genetics (pound 3.8 million vs. pound 1.8 million).

Implementation of Social Benefits

Social benefits implementation by the end of August 2024 reached pound 35.2 million, largely driven by the government scholarship programme (pound 12.8 million), grants to volunteer organisations (pound 11.3 million), expenditures fo
r cultural benefits (pound 3.9 million), and student welfare grants (pound 2 million).

Source: Cyprus News Agency