NICOSIA - Official data shows the fiscal deficit is at its lowest level for five years at 4.9% of GDP.
This is lower than the Finance Ministry’s reviewed forecast of 5.5% for 2012 and the narrowest margin since the government enjoyed a surplus in 2008.
Improved fiscal stability comes at a time when the economy is shrinking and negatively affecting the inflow of revenue.
Under the draft Troika memorandum the government pledged to steadily reduce the deficit with a view to establishing a surplus by 2016.
During 2012 the deficit was reduced by €212.6 million compared to 2012 when the deficit peaked at 6.1%.
This is mainly due to enforced austerity measures such as spending cuts and slashing the state pay roll under the Troika’s bailout terms.
Public expenditure last year was reduced by €194.4m to €7.47 billion from €7.67b in 2011.
There were also cutbacks in benefit payments and the purchasing of products and services.
However there was an increase in social insurance payments from €1.36b to €1.49b.
Despite an increase in taxes such as VAT the inflow of state revenue has been at a trickle increasing only 0.5% to €6.49b from €6.46 the previous year.