Cyprus’ current account deficit widened and its international investment position deteriorated during the first quarter of 2026, according to preliminary external sector data released on Tuesday by the Central Bank of Cyprus (CBC), which also showed that external debt increased by approximately €1.5 billion.

The current account deficit expanded to €1.27 billion in the first quarter of 2026, compared with €1.01 billion in the corresponding period of 2025, representing a deterioration of €263 million.

When adjusted to treat special purpose entities (SPEs) as non-residents, the current account deficit stood at €1.37bn, compared with €1.12bn in the first quarter of 2025.

The CBC said the deterioration was mainly driven by a larger secondary income deficit and lower net exports of services, particularly in financial services and telecommunications, computer and information services.

These developments were partly offset by an improvement in the goods balance and a smaller deficit in primary income, the central bank added.

Despite the weaker current account position, Cyprus recorded net financial inflows of €1.14bn during the first quarter, exceeding the level seen a year earlier.

According to the CBC, the increase reflected a smaller net outflow position in portfolio investment and stronger net inflows under other investment.

The country’s international investment position (IIP) also weakened during the quarter.

Cyprus’ net liability position widened to €28.31bn at the end of the first quarter, compared with €28.17bn at the end of the fourth quarter of 2025.

After adjusting for the impact of SPEs, the net liability position increased to €10.03bn, from €8.93bn in the previous quarter.

The country’s gross external debt rose to €226.66bn at the end of the first quarter, compared with €225.19bn three months earlier.

At the same time, external debt assets edged down to €223.53bn, from €223.62bn at the end of the fourth quarter of 2025.

As a result, net external debt increased by €1.57bn to €3.14bn during the first quarter.

When adjusted for the impact of SPEs, gross external debt stood at €59.94bn, up from €59.18bn at the end of 2025.

The corresponding measure for net external debt, adjusted for SPEs, increased to minus €30.46bn, compared with minus €30.95bn in the previous quarter.

The CBC also reported that Cyprus recorded bilateral current account surpluses with Germany and Russia during the first quarter.

By contrast, the country posted bilateral current account deficits with Greece, the United Kingdom and the United States.

The central bank added that Cyprus’ current account deficits with both the European Union and the euro area narrowed during the reporting period.