Record $1.45 billion surplus in
2025 as revenues grew 59 percent

Reversal of fortune expected in 2026

An unprecedented budget surplus of $1.45 billion was recorded in 2025, a six-fold increase from the previous year. A sharp increase in State revenues significantly outpaced growth in public spending, according to the Ministry of Finance.

Revenues
Total government revenues and receipts reached LL554 trillion ($6.2 billion) in 2025. This represents a 59 percent increase from LL349 trillion ($3.9 billion), recorded in 2024.

The strong revenue performance was driven primarily by tax collections, which rose by nearly 64 percent year-on-year to $4.66 billion from $2.84 billion in 2024. The increase reflects several factors, including the end of the previous conflict early in 2025 and tighter controls at land, sea, and air entry points, which boosted customs revenue collection.

Revenues from VAT have increased by almost 50 percent – which reflects better enforcement and likely increase in consumption, although increases in Customs revenues were at just 14 percent. Revenues from Real Estate registration fees have increased 2.5 times, also reflecting better collection, delayed sales registration, and increased real estate valuations due to rule changes. Other notable increases include from telecom (69 percent), vehicle control (108 percent), work permits (52 percent), and penalties which have more than doubled.

Non-tax revenues also posted solid growth, rising 49 percent to $869 million from $585 million a year earlier. Other treasury receipts increased by 41 percent, reaching $667 million compared with $471.5 million in 2024.

Expenditures
As revenues surged, government spending also grew, albeit at a much slower pace. Total expenditure reached $4.74 billion in 2025, up 30 percent from $3.65 billion in 2024. The increase was roughly half the pace of revenue growth, reflecting the government’s continued fiscal restraint.

The spending policy forms part of a broader strategy aimed at limiting the use of public funds deposited at the Central Bank. The approach has been closely linked to monetary objectives, including absorbing excess liquidity in lira, containing money supply growth, and using part of the accumulated funds to strengthen foreign currency reserves. The impact of this policy has been reflected in higher public sector deposits at the Central Bank and an increase in foreign exchange reserves during the year.

Major spending increases were recorded in Personnel Cost (31 percent) which amounted to $2.58 billion or more than half the entire budget, and Hospitals (300 percent).

Record Surplus
As a result, a primary budget surplus (excluding interest payments) of $1.76 billion in 2025 was achieved. The figure is more than four times higher than the $433.6 million primary surplus achieved in 2024.

After accounting for interest payments, the overall budget surplus stood at $1.45 billion, equivalent to approximately 23 percent of total budget revenues. By comparison, an overall surplus of $244 million was recorded in 2024, representing around 17 percent of the surplus achieved in 2025.

Sustainability in doubt
The stronger-than-expected fiscal performance exceeded projections contained in the 2025 budget law, which had anticipated a broadly balanced budget. The results have also helped support the Ministry of Finance’s proposal for a larger 2026 budget, based on expectations of continued revenue growth.

Attention is now shifting to the impact of the ongoing war on public finances. Analysts and policymakers are closely watching whether declining economic activity and disruptions to revenue collection could reverse last year’s gains and return the budget to deficit territory in 2026.