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Cyprus government debt drops to €22.4 billion in 2023

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Cyprus’ central government debt, comprising approximately 99 per cent of the total debt of the Republic of Cyprus, reached €22.4 billion at the end of 2023, according to a report released this week.

This reflects a reduction of €689 million, corresponding to a 3 per cent drop, compared to the corresponding period of the previous year.

The entire decrease can be attributed to the repayments of domestic bonds and securities, while the remainder of the European Medium-Term Notes (EMTN) remained unchanged, serving as the primary source of financing.

Notably, 97 per cent of the central government’s debt originates from external borrowing sources, including EMTN bonds and loans from official foreign entities.

In comparison to the end of 2020, a year marked by substantial debt issuances to build reserves for increased needs due to the Covid-19 pandemic, the central government’s debt has decreased by €2.2 billion.

According to data released by the Public Debt Management Office (PDMO) this week, the remaining balance of EMTN stood at €13.45 billion, constituting 60 per cent of the total government debt.

In addition, the EMTN bond debt remained stable, with Cyprus issuing its first green and social bond worth €1 billion last year, offsetting the maturity of a bond of equal value.

The category of external loans, including those from the European Stability Mechanism (ESM), amounted to €8.52 billion at the end of 2023, compared to €8.26 billion at the end of 2022, representing 37 per cent of the total debt.

The repayment of the ESM loan, initiated during the 2013 crisis, will commence in 2025 and conclude in 2031.

Regarding internal loans, the debt towards the Housing Finance Organisation, totalling €250 million, remains unchanged and will mature in 2026.

Furthermore, the balance of public bonds has fallen to €20 million by the end of 2023, down from €137 million in the corresponding period last year.

A significant reduction was also observed in the remaining domestic bonds, which stood at €92 million at the end of 2023, down from €617 million at the end of 2022.

According to the PDMO, the balance of bonds and special bonds for individuals decreased to €308 million at the end of 2023, compared to €371 million in the same period last year.

Consequently, the total debt in domestic securities at the end of 2023 decreased by more than half compared to the end of 2022, amounting to €420 million, down from €1.12 billion.

It is worth noting that the financing needs for 2024 have been set at €1.3 billion, of which €1 billion will be sourced through the issuance of EMTN bonds in international markets.

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