At the end of 2023, fixed rate borrowing is 67% and floating at 33%
The public debt of Cyprus is constantly decreasing and it seems that it is heading towards the percentage of the debt that it was in 2019. In more detail, the public debt at the end of 2023 was at 22.3 billion euros, while in September of the same year it was at 22.4 billion . euro. In June 2023 the debt amounted to 23.8 billion euros, while it is now 300-400 million euros away from reaching the level of 2019 (21 billion euros). According to the debt structure, domestic debt is limited to only 3%, compared to 97% which is foreign debt. According to data from the public debt management office for the end of 2023, fixed rate borrowing is 67% and floating at 33%. What emerges from the last 3 quarters of 2023, floating rate loans keep growing, since in June they were at 30%, in September at 31% and as mentioned above, at the end of the year they represented 33%. Correspondingly, fixed rate loans are reduced to 67%, 69% and 70%.
As noted by the Public Debt Management Office, during the last quarter of 2023, an auction of 13-week Treasury Bills was held with an acceptable amount of 20 million. The weighted average yield of this auction was 4%, showing an increase compared to the corresponding average yield of the three auctions of the second quarter of 2023, which was 3.9%. The auction coverage ratio decreased to 2.1 compared to the previous quarter's 2023 auction coverage ratio, which stood at 2.7. Bond issues for natural persons amounted to 7 million euros. In terms of debt repayments, T-bill maturities for the fourth quarter of 2023 amounted to 35 million and bond repayments for natural persons, including early repayments, amounted to 37 million euros. Loan repayments amounted to 55 million euros.
Based on the preliminary forecasts of the Ministry of Finance in the 2024 Budget, public debt as a percentage of GDP is estimated to remain on a downward path and to be limited at the end of 2026 to 60.1%. The general government budget balance for 2023 is expected to remain in surplus at 1.9% of GDP, compared to a surplus of 2.1% in 2022. The primary surplus is estimated at 3.3% for 2023 compared to 3.6% of GDP last year. In the medium term, the fiscal position is projected to remain in surplus with the fiscal balance averaging around 2.1% of GDP over the period 2024 – 2026. Public debt as a percentage of GDP is estimated to remain on a downward trend and be limited to end of 2026 at 60.1%.
The outlook
According to the basic macroeconomic scenario of the 2024 Budget, the prospects of the Cypriot economy in the medium term remain positive, however with a significant degree of uncertainty. After further improvement in 2022 relative to 2021, the economy slows down in 2023 due to significant challenges facing the global economy and the ongoing Russia-Ukraine war, with growth accelerating again in 2024-2026. According to the basic macroeconomic scenario, the growth rate is predicted to fluctuate around 2.9% in 2024, while for the years 2025 and 2026 it is expected to fluctuate at 3.1% and 3.2% respectively. The rate of inflation (Consumer Price Index) for 2024 is predicted to fluctuate at 3.5%, while for the years 2025 and 2026 it is predicted to rise to 2%. The unemployment rate is expected to decrease to around 5.8% of the labor force in 2024 and then in 2025 to be limited to 5.3% and in 2026 to decrease further to 5%. The current account deficit is expected to improve in the years 2024-2026 and decrease to 9.2%, 8.6% and 8% of GDP respectively. Finally, the Net Investment Position is expected to improve as a percentage of GDP following the improvement in the Current Account.
2024 started on the right foot with increased revenues
According to the Cyprus Statistical Service, total revenues in the period January-February 2024 increased by €333.9 million (+16.7 %) and amounted to €2,328.0 million compared to €1,994.1 million in the corresponding period of 2023.
Specifically, total taxes on production and imports increased by €54.1 million (+8.0%) and amounted to €727.2 million compared to €673.1 million in 2023, of which net VAT revenue (after deducting refunds) increased by €51.7 million (+11.0%) to €523.2 million compared to €471.5 million in 2023. Revenue from taxation on income and wealth increased by €120.8 million (+20.1%) to €721.7 million compared to €600.9 million in 2023. Social contributions increased by € 98.6 million (+17.1%) and amounted to €673.9 million compared to €575.3 million in 2023. Interest and dividends received increased by €1.2 million (+7, 7%) and amounted to €16.8 million compared to €15.6 million in 2023. Current transfers increased by €4.0 million (+14.3%) to €31.9 million . compared to €27.9 million in 2023. Revenue from services increased by €53.0 million (+54.4%) to €150.4 million compared to €97.4 million . in 2023. Capital transfers increased by €2.2 million (+56.4%) and amounted to €6.1 million compared to €3.9 million in 2023.
source: ECONOMICS/By Panagiotis Rougalas
