Nicosia – The Cyprus government generated a fiscal surplus on a cash basis of €147.2 ml in the first quarter of 2016 after posting a fiscal deficit of €19 ml in the respective three-months of 2015, Cyprus Ministry of Finance announced this week.

The improved fiscal result was mainly on increased revenue which rose by €136 ml in January to March to €1.6 bln mainly on increased non-tax revenue which almost doubled to €256.6 ml, the ministry said in a statement.

Direct tax revenue rose by €7 ml to €483.8 ml offsetting a €6 ml drop in indirect tax revenue to €585.7 ml in the first quarter compared to the respective period a year before.

In the first quarter, the government reduced its spending by €49 ml to well below €1.5 ml compared to the first quarter of 2015, mainly on reduced current expenditure which fell by €57 ml to €1.4 bln, the ministry added. The drop in current expenditure was mainly on a €27 ml decrease in pensions to €128.4 ml, a €18 ml drop in each current transfers and interest payments to €326.6 ml and €99.5 ml respectively. Wages and salaries and capital expenditure rose by €4 ml and €9 ml to €390.4 ml and €22.9 ml respectively.

In the first quarter, the government generated a primary fiscal surplus on a cash basis of €239.5 ml compared to €93 ml in the respective three-month period of 2015.

Meanwhile, the Cyprus Statistical Service also announced this week that in the first four months of 2016 inflation in Cyprus fell at a rate of -1.9% compared to the same period of 2015.