Cyprus’ current account deficit narrowed to €257.3 million in Q2 2025, down from €341.7 million in the same period last year, according to provisional data from the statistics department of the Central Bank of Cyprus (CBC).

“When adjusted for the impact of Special Purpose Entities, the current account deficit stood at €280.9 million, compared with €363.6 million in Q2 2024,” the central bank said.

The international investment position also improved during the quarter, registering a net liability position of €30.09 billion in Q2 2025, compared with €30.42 billion in Q1 2025.

Adjusted for the impact of SPEs, the international investment position showed a net liability of €11.48 billion in Q2 2025, down from €11.87 billion in Q1 2025.

Gross external debt decreased slightly to €232.98 billion in Q2 2025, from €233.59 billion in Q1 2025.

At the same time, external assets in debt instruments fell to €223.08 billion from €223.4822 billion in the previous quarter.

Consequently, net external debt fell by €213.0 million to €9.90 billion in Q2 2025, the central bank reported.

When adjusted for the impact of SPEs, gross external debt was €59.04 billion, compared with €59.56 billion in Q1 2025.

The corresponding net external debt indicator decreased to -€24.31 billion in Q2 2025, down from -€23.92 billion in Q1 2025.

The data indicates a continuing improvement in Cyprus’ external balances, reflecting both lower deficits and gradual adjustments in investment positions.

It should be noted that gross external debt represents the total amount that residents and companies in Cyprus owe to non-residents, including government, corporate, and banking sector borrowings.

The figure mentioned above can be viewed as being high largely due to Special Purpose Entities (SPEs) and international financial flows, which inflate the number without reflecting domestic financial stress.