Cyprus Mail

Average maturity of government debt falls to 7 years in 2017

The weighted average maturity of the general government debt, which in December last year fell to €18.7bn, dropped to 7 years at the end of 2017 from 7.5 years in 2016, the Public Debt Management Office (PDMO) said.

The average maturity of marketable debt on the other hand, remained unchanged at 4.9 years, the PDMO said in a statement on its website. More than one third of total debt falls within the next five years while 5.7 per cent of the total matures in 2018.

In December, the amount of public debt with a floating rate, which included loans from the European Stability Mechanism (ESM), the International Monetary Fund (IMF), accounted for 46 per cent of public debt while the remaining amount was borrowed at a fixed rate.

Official loans which include those from the ESM, the IMF, the Russian Federation and the European Investment Bank (EIB) and the Council of Europe Development Bank (CEB) made up at the end of last year, 61 per cent of total debt while bonds issued abroad accounted for 24 per cent of the total, the PDMO said. At the end of 2016, the respective share was 64 per cent and 22 per cent.

The government which last year generated a fiscal surplus of €343.6m or 1.8 per cent of the economy repaid €614.9m to the Central Bank of Cyprus in 2017 and €280m to the IMF which participated in Cyprus’s 2013 bailout by making available €1bn in funds. The bailout was necessary as Cyprus which was shut out of markets in 2011, was unable to refinance more than one fifth of its maturing debt maturing in 2013 and provide support to its undercapitalised banking sector.

The government last year issued a €850m seven-year bond to smooth out future debt maturities and two months ago commenced with the repayment of the €2.5bn loan from Russia negotiated in 2011 and restructured two years later. The government’s decision to issue €2.4bn in bonds to the state-owned Cyprus Cooperative Bank in April is expected to result in an increase of public debt by 8 per centage points this year, in which it expects to generate a fiscal surplus of 1.7 per cent of gross domestic product.

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