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16 June, 2024
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Cyprus' public debt declines, economic outlook brightens

A reduction in debt and revenue surge signal positive trends for the island nation


According to a report by Panayiotis Rougalas, Cyprus is seeing a promising reduction in its public debt, with figures suggesting a return to 2019 levels. The debt stood at €22.3 billion by the end of 2023, showing a slight decrease from €22.4 billion in September of the same year. Notably, the debt had reached €23.8 billion in June 2023, indicating a notable decline.

Analysis of the debt structure reveals that domestic debt accounts for a mere 3%, with the remaining 97% being foreign debt. The composition of borrowing also indicates a shift, with fixed-rate borrowing at 67% and floating-rate borrowing at 33%. Interestingly, the latter has been on the rise, increasing from 30% in June to 33% by the end of 2023, while fixed-rate loans have witnessed a decline.

In the fiscal realm, the Ministry of Finance's preliminary projections foresee a continued downward trajectory of public debt as a percentage of GDP, with an estimated 60.1% by the end of 2026. The government's fiscal balance remains in surplus, although slightly decreased compared to previous years. However, the primary surplus is expected to remain robust.

Looking ahead, the economic outlook remains positive albeit with some uncertainties. Growth is anticipated to rebound in the coming years, with projections indicating around 2.9% growth in 2024 and further acceleration in subsequent years. Inflation rates are expected to stabilize, while unemployment rates are projected to decline.

The start of 2024 has seen a notable increase in revenues, with total revenues for January-February witnessing a significant rise of €333.9 million compared to the same period in 2023. This increase is attributed to various factors, including higher taxes, social contributions, and service revenues, signaling a promising start for the year.

[This article was translated and summarized from its Greek original]

Cyprus  |  economy  |  finance

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