Government deficit inflated by lockdown

The general government deficit – the balance of income and expenditure – at the end of May came to €528.8 million (or 2.6% of GDP) as a result of the steep decline in tax revenue during the coronavirus-related lockdown.

This compared to a general government surplus of €201.3 million registered for the same period last year, the Statistical Service said.

It said the deficit is due to the drop in tax revenue and customs duties, and the simultaneous increase in welfare spending by the state to prop up businesses and individuals affected by the lockdown.

From January to May this year, total taxes on production and on imports dropped by 15.8%, while net revenues from VAT fell by 10.8%.

The service’s preliminary results in question show that total government expenditure came to €3.462 billion, compared to €3.139 billion for the same period last year.

Specifically, spending on alleviating the fallout from the lockdown came to €216.1 million by the end of May.

Source: Cyprus Mail