Cyprus witnessed a significant surge in private debt during the first quarter of 2023, reaching a staggering 218 per cent of the country’s Gross Domestic Product (GDP), amounting to €60.1 billion, according to a report released by the Central Bank of Cyprus (CBC) on Monday.
The quarterly financial accounts report for the period ending in March 2023 revealed that household debt amounted to €20.2 billion, representing 73 per cent of the Gross Domestic Product (GDP).
This figure showed a marginal decline compared to the previous quarter, primarily attributed to the rise in GDP. In absolute numbers, household debt increased by €200 million from December 2022.
On the other hand, households’ financial assets, including cash, deposits, loans, debt securities, equities, and other financial instruments, totalled €59.6 billion at the end of March 2023, slightly lower than the €59.7 billion recorded at the end of December 2022.
Among these assets, 61 per cent were in cash, deposits, and loans, 2 per cent in debt securities, 20 per cent in equities, and 18 per cent in other financial instruments.
Comparing the current data to that of December 2016, the household debt-to-GDP ratio showed a significant reduction of approximately 42 per cent, reflecting positive developments in the country’s economic landscape.
The Central Bank of Cyprus also reported that non-financial corporations’ debt, including loans and debt securities, rose to €39.9 billion by the end of March 2023, representing 145 per cent of GDP.
This figure showed a marginal increase compared to the previous quarter. In absolute numbers, non-financial corporate debt was at €38.6 billion at the end of December 2022.
At the same time, non-financial corporations’ assets amounted to €66.3 billion at the end of March 2023, slightly lower than the €68.3 billion recorded at the end of December 2022.
These assets were distributed with 18 per cent in cash and deposits, 4 per cent in loans, 0.3 per cent in debt securities, 48 per cent in equities, and 30 per cent in other financial instruments.
The report highlighted that compared to December 2016, the non-financial corporations’ debt-to-GDP ratio exhibited a substantial reduction of approximately 66 per cent, indicating positive trends in the financial health of companies in Cyprus.
The recent data released by the Central Bank of Cyprus has raised concerns among economists and policymakers about the implications of such high levels of private debt on the country’s economic stability and financial well-being.
