Cyprus, as everything shows, is expected to go on loan in the international markets on Tuesday, aiming to raise € 1 billion. with € 1.5 billion. through long-term borrowing, for debt refinancing but also to have the cash margins to support households and businesses, awaiting the recession of the pandemic.
According to the information, the pumping is likely to reach around € 1.5 billion. as the data generated by the effects of the pandemic do not allow a small amount to be raised. Cash is needed at this stage as support measures for businesses and households will continue for as long as needed and uncertainty about the extension of the pandemic continues. The Minister of Finance, Konstantinos Petridis, had stated before the Finance Committee of the Parliament that we will enter the markets “not because we ran out of cash”, but because “we had planned it”, for the purposes of debt refinancing and repayment of a promissory note. Last week, Greece entered the markets. It borrowed € 3.5 billion which came from the successful issuance of the 10-year bond, with a historically low interest rate of 0.80%.
In Cyprus, the European Medium-Term Bonds will continue to be the main source of lending to meet the financial needs of the government in the framework of the 2021-2023 strategy. This policy is of strategic importance because through the international market, issuers can attract investors beyond the domestic market and the international market, thus expanding the investment base in size, geographically and by category. It is noted that these bonds are issued through the Euro Medium Term Note (EMTN) Program, are governed by English Law and are listed on the London Stock Exchange.
Last year, in January 2020, the government issued two bonds with a maturity of 10 and 20 years totaling € 1.75 billion. However, the data in March 2020 due to COVID changed and so in April Cyprus issued two more European EMTN bonds totaling € 1.75 billion. and a one-year treasury bill of € 1.25 billion. to strengthen the state's cash. Then in July 2020 the state proceeded to a new borrowing of € 1 billion. through a supplementary issue to two existing EMTNs, one for 5 years and one for 20 years, taking advantage of the favorable conditions that prevailed in the markets. According to the Office of Public Debt Management, the 2021-2023 strategy period is characterized by manageable financing needs, despite the impact of the Covid-19 pandemic on public finances. The years 2021-2023 are characterized by low to moderate financing needs, with the budget deficit remaining at low levels for the years 2021-2022 and disappearing in 2023, as a result of which the financial needs of this year are reduced. In relation to the size of the economy, gross financing needs will range between 6% and 11% of GDP over the three-year period. Gross financing needs amount to € 2.3 billion in 2021, € 2.1 billion in 2022 and € 1.4 billion in 2023.