Cyprus household debt drops to 69 per cent of GDP — total financial assets reach €57 billion

Household debt in Cyprus has fallen to 69 per cent of the Gross Domestic Product (GDP), according to a report released on Tuesday by the Central Bank of Cyprus (CBC), for the period ending June 2023.

In addition, the report noted that the total financial assets of Cypriot households amounted to €57 billion.

Out of the €57 billion, 58 per cent was in cash, deposits, and loans, 2 per cent in securities, 21 per cent in stocks, and 19 per cent in other financial assets. The decrease in household debt was primarily attributed to the increase in GDP during the previous quarter.

In comparison to December 2016, household debt has experienced a significant reduction, reaching approximately 46 per cent.

The financial assets of non-financial corporations amounted to €66 billion, with 19 per cent in cash and deposits, 4 per cent in loans, 1 per cent in securities, 45 per cent in stocks, and 31 per cent in other financial assets.

Furthermore, the debt of non-financial corporations stood at €40.4 billion at the end of June 2023, with a debt-to-GDP ratio of 140 per cent, also showing a slight decrease compared to the previous quarter due to the GDP increase.

In comparison to December 2016, non-financial corporations have seen their debt-to-GDP ratio decrease to around 70 per cent.

In addition, according to data published by the Central Bank, the total financial assets of insurance companies were €4.9 billion, distributed as 9 per cent in cash and deposits, 2 per cent in loans, 27 per cent in securities, 42 per cent in stocks, and 20 per cent in other financial assets.

Similarly, investment organisations held financial assets amounting to €8 billion, with 4 per cent in cash and deposits, 11 per cent in loans and securities, 83 per cent in stocks, and 2 per cent in other financial assets.

The investments in financial assets by pension funds reached €4 billion and were primarily composed of 19 per cent in cash and deposits, 15 per cent in loans, 6 per cent in securities, 49 per cent in stocks, and 10 per cent in other financial assets.

It should be noted that according to a Eurostat report released earlier this month, Cyprus witnessed a significant increase in its government debt-to-GDP ratio at the end of the second quarter of 2023, rising by 2.2 percentage points from the previous quarter, to reach 85.3 per cent.

This was the highest debt-to-GDP increase among EU member states during this period of time.

At the same time, the report added, Cyprus saw an 8.1 percentage point reduction compared to the second quarter of 2022, the third most substantial decrease in the EU.

In the eurozone, this ratio slightly decreased to 90.3 per cent during the second quarter of 2023 compared to 90.7 per cent in the first quarter of the year.

Across the EU, this indicator declined to 83.1 per cent in the second quarter of the year, down from 83.4 per cent in the first quarter.