Cyprus debt drops 3.1% year-on-year

Cyprus’ public debt declined to €24.18 billion at the end of June 2022, marking a 3.1% reduction compared with the respective period of last year, according to the latest available data.

Compared with the first quarter of this year, Cyprus’ gross public debt marked a reduction of 3.9%.

In May the government repaid a european medium-term note (EMTN) amounting to €1 billion using available cash reserves.

In June 2022, Cyprus’ debt declined to its lowest level since the outbreak of the Covid-19 pandemic but remains significantly elevated compared with the pre-pandemic levels, as the Finance Ministry had proceeded with large debt issuances, in a bid to boost the government’s cash buffers with a view to supporting economic activity during the health crisis.

According to the latest data, a sizable amount of Cyprus’ gross debt in June 2022, estimated at over 10%, is held in cash reserves, which covers the 2022 financing needs and a significant part of 2023.

Furthermore, the Finance Ministry said in its Stability Program for 2022-25 that it estimates that public debt is projected to decline to €23.5 billion or 93.9% of GDP by the end of the year and will continue its downward trajectory in the following years, as the government is winding down its cash buffers.

“The expected reduction of general government debt by 10.1 percentage points is attributed to the repayment of a significant amount of debt due within the year which is expected to be covered both through new debt issuances as well as through the utilization of the cash buffer,” the Finance Ministry said.

In 2023, gross public debt is estimated to decline to about 88.2% and 81% and 76.7% by the end of 2024 and 2025 respectively, the ministry added.

In early 2022, Cyprus issued €1 billion in a 10-year EMTN bond, covering its basic financing needs for the year.

The ministry plans to also issue a €500 million bond. [Cyprus Mail]