Newsroom
According to report by Panayiotis Rougalas in today's Oikonomiki, Cyprus faces a challenging time as it navigates plans to exit the financial markets. Initially planning to cease borrowing from international markets by the first half of 2024 to secure €1 billion, the exit strategy is now expected to unfold in September. This delay stems from various factors, including unfavorable international political developments and the closure of markets in July and August.
Recent political turmoil in France, with the dissolution of the Parliament and upcoming elections, has added to the uncertainty. French bond markets have experienced volatility, affecting the broader euro markets. Consequently, Cyprus may not capitalize on its recent debt upgrade by Fitch rating agency as originally hoped.
Standard and Poor's is expected to release another rating for Cyprus soon, which could have provided momentum for market entry. However, it appears likely that Cyprus will postpone leveraging positive ratings until later in the year. This postponement marks the second time Cyprus has delayed its market exit plans, initially slated for April and then June.
In the economic landscape, two European EMTN bonds are set to mature this year, adding to financial pressures. Despite efforts to reduce public debt as a percentage of GDP, Cyprus still faces challenges. While the debt has declined from its peak during the pandemic, reaching 77.3% in 2023, further reductions are projected in the coming years. The new economic governance framework aims to ensure debt sustainability and fiscal balance, but uncertainties in the market pose ongoing challenges for Cyprus.
Consequently, Cyprus is pushing to exit the financial markets in order to enhance its fiscal resilience and reduce dependency on external borrowing. By asserting greater control over its finances, Cyprus aims to promote economic stability and sovereignty while minimizing vulnerability to external financial pressures.
