Cyprus government achieves significant debt reduction in 2023

The Cyprus government reported that the island nation ended 2023 with a debt of €22.4 billion, constituting around 99% of the Republic of Cyprus' total debt. This marks a notable reduction of €689 million or 3% from the corresponding period in the previous year.

The debt decrease is solely attributed to the repayment of domestic bonds and securities, while the Euro Medium Term Notes (EMTNs), a primary funding source, remained unchanged. External sources, including EMTN bonds and loans from official entities, contribute to 97% of the Central Government's debt.

Compared to the end of 2020, when the government incurred substantial debt to address COVID-19-related needs, the Central Government's debt has decreased by €2.2 billion.

As reported by the Public Debt Management Office (PDMA), EMTN balances stayed constant at €13.45 billion, comprising 60% of the overall government debt. The stability in EMTN bonds can be attributed to Cyprus issuing its first green/social bond worth €1 billion while redeeming a mature bond of the same value.

External loans, including those from the European Stability Mechanism (ESM), stood at €8.52 billion by the end of 2023, representing 37% of the total debt. ESM loans, acquired during the 2013 crisis, amount to €6.3 billion, with repayment scheduled from 2025 to 2031.

Domestically, the Housing Finance Corporation (HFC) loan of €250 million is outstanding, maturing in 2026.

The balance of Government Securities dwindled to €20 million by the end of 2023, compared to €137 million the previous year. There was also a substantial decrease in domestic bonds, totaling €92 million at the end of 2023, down from €617 million in 2022.

PDMA reported that the balance of bonds and special bonds for individuals decreased to €308 million at the end of 2023 from €371 million the previous year. Consequently, the total internal securities debt at the end of 2023 decreased by more than half compared to the end of 2022, reaching €420 million from €1.12 billion.

Looking ahead, the financing needs for 2024 are set at €1.3 billion, with €1 billion expected to be raised through the issuance of EMTN bonds in international markets.

[Source: CNA]