Cyprus sees debt-to-GDP ratio drop to 72.3 per cent

Cyprus has seen its debt-to-GDP ratio drop to 72.3 per cent, marking a substantial decrease of nearly 10 percentage points over the past year.

According to a report released on Friday from the Cyprus Statistical Service (Cystat), the total general government debt was recorded at €22.81 billion at the end of June, a reduction from the previous figure of €23.04 billion at the end of March.

Consequently, this decrease of €1.6 billion, corresponding to a drop of 6.8 per cent, compared to June 2023, has brought the debt-to-GDP ratio down from the previous year’s 82.1 per cent.

Furthermore, a significant contributor to this fiscal improvement was the expiration of a €850 million Euro medium-term note (EMTN) at the end of June, coupled with the upcoming maturity of another €1 billion EMTN bond by the year’s end.

Additionally, on June 18, Cyprus issued a €1 billion seven-year bond, effectively ensuring the financial resources needed to cover its annual requirements, which the Public Debt Management Office (PDMO) estimates at €1.3 billion.

Moreover, GDP growth in the first half of the year also significantly impacted the debt reduction, standing at a seasonally adjusted rate of 3.5 per cent.

This performance not only exceeded the Finance Ministry’s conservative forecast of 2.9 per cent for the year but also prompted a subsequent upward revision following Cystat’s preliminary estimate of 3.7 per cent growth in the second quarter.

As a result, the revised forecast will be included in the 2025 government’s budget, which is expected to receive Cabinet approval by mid-September.

The above data indicate that the debt-to-GDP ratio may close the year below the Finance Ministry’s initial projection of 70.5 per cent, as detailed in the fiscal outlook for 2025-2028.

Finally, the ministry said that it expects that the ratio will drop below the Maastricht Treaty’s threshold of 60 per cent by 2026.