Cyprus’ debt-to-GDP ratio declines to 72.3% by June 2024

Cyprus’ debt to GDP ratio declined to 72.3% according to the latest data released by the island’s Statistical Service (Cystat) marking a drop of almost ten percentage points year on year.

In the end of June the general government debt amounted to €22.81 billion from €23.04 billion in the end of March of 2024. Compared with June 2023 Cyprus’ debt dropped by €1.6 billion or 6.8%. In June 2023 Cyprus’ debt to GDP ratio stood at 82.1%.

In the end of June Cyprus repaid a maturing European Medium Term Note of €850 million, while by the end of the year another EMTN bond amounting to €1 billion will be repaid. On June 18 Cyprus issued a 7-year EMTN bond amounting to €1 billion, which in combination with other financing tools, will cover its financing needs for the whole year amounting to €1.3 billion, according to the Finance Ministry’s Public Debt Management Office.

Apart from debt redemptions, the GDP-to-GDP reduction was driven by Cyprus’ strong GDP growth rate, with the economy expanding by 3.5% (in seasonally adjusted terms) in the first half of the year, exceeding the Finance Ministry’ conservative projection of a growth rate of 2.9% throughout the year. After Cystat’s flash estimate for a 3.7% growth rate in the second quarter of 2024, the Ministry said it will revise upwards its projection for 2024. The new projections will be incorporated in the 2025 state budget which according to the Finance Minister, is expected to be approved by the Council of Ministers by mid-September.

Furthermore, the latest data shows that Cyprus could exceed the Ministry’s initial estimate over the year-end debt-to-GDP ratio of 70.5%, included in the Fiscal Policy Strategic Framework 2025-2028. Based on the Finance Ministry’s projections, Cyprus debt to GDP ratio is estimated to decline below the mark set by the Maastricht Treaty of 60% by the end of 2026.