Cyprus’ 2027 state budget provides for total expenditure of €14.4 billion, an increase of around €697 million, or 5.1%, compared with the approved 2026 budget.
Social spending, personnel costs and increased defence expenditure account for some of the largest allocations in the budget, which has been submitted to the House of Representatives.
Transfer payments reach €4.49 billion
The largest spending category remains transfer payments, which increase from €4.24 billion in 2026 to €4.49 billion in 2027, accounting for almost one-third of total expenditure.
Transfer payments include €2.3 billion in social benefits, an increase of 2.9%, and €1.7 billion in state contributions to the Social Insurance Funds and Gesy.
Cyprus’ contribution to the EU budget amounts to €399.4 million.
The category also includes grants to public and private-law state organisations, including €236.6 million for public universities, and €190.8 million in grants to local authorities.
Personnel costs rise to €3.75 billion
Personnel expenditure, the second-largest spending category, will increase from €3.71 billion in 2026 to €3.75 billion in 2027.
Operating expenditure records the largest percentage increase, rising by 15.4%, or €247.6 million, from €1.61 billion to €1.86 billion.
Defence and policing spending increases
Operating expenditure includes maintenance and repairs, training and conferences, consultancy services and research, water purchases, defence and policing, as well as unforeseen expenditure and reserves.
The increase is primarily attributed to an additional €261.6 million for defence and policing expenditure.
The allocation for water purchases has increased by €26 million, while spending on maintenance and repairs is up by €24.5 million.
€2.52 billion allocated for loan repayments
Loan repayments remain a significant part of the budget at €2.52 billion, reflecting the government’s strategy to further reduce public debt.
Interest expenditure is also expected to increase, from €665.2 million to €711.4 million.
Capital expenditure is projected to rise by 2.1% in 2027, reaching €594.5 million, compared with €582.4 million in 2026.
This includes road construction, purchases of land and buildings, fixed and mobile machinery and equipment, as well as the construction, expansion and improvement of buildings.
Major projects receive funding
Among the main projects financed through national resources are:
- New Cyprus Museum: €27.9 million
- Paphos-Polis Chrysochous road: €18 million
- Deneia-Akaki-Astromeritis road: €15.9 million
- New Legal Service building: €13.5 million
Despite the increase in expenditure, the government forecasts a budget surplus of 2.8% of GDP in 2027.
Public debt is projected to decline further to 46.6% of GDP.
