Georgiades says public debt of 107% of GDP is “absolutely sustainable”


By Stelios Orphanides

Finance minister Harris Georgiades said that Cyprus’s government debt is “absolutely sustainable” after the government smoothed out debt maturities to 2020.

Georgiades who was commenting in an interview to Bloomberg said that the government could “probably” tap international markets in the second half of the year in anticipation of better market circumstances.

“We have a very comfortable cash position, we do not have a deficit which means we choose the time when access the market,” he said. “We are not under particular pressure to do so at a particular time”.

According to the Public Debt Management Office, the government bought back last year a total of €558.5m in debt maturing in 2019 to 2021 using mainly proceeds from the issue of the 7-year bond issued in July, reducing to some extent debt maturities in 2019 and 2020 which initially stood at almost €4bn or more than one fifth of economic output.

According to the winter forecast of the European Commission, the Cypriot public debt is expected to decline to 103.2 per cent of gross domestic product this year from an estimated 107.4 per cent last year, when the government produced a balanced budget. This year, the government is forecast to generate a deficit of 0.2 per cent of GDP, according to the EU Commission, which is one third of the deficit the government forecast in September.

Georgiades said that the Cypriot economy which is expected to expand almost 3 per cent this year after growing 2.8 per cent in 2016, is making progress towards further sovereign rating upgrades as the banking sector reduces its stock of non-performing loans.

“We are making progress,” he said in reference to the drop of the declining secondary market yields of Cypriot debt. “We are confident that further upgrades will come but markets are essentially ahead of the rating agencies. We have already re-established sustainable market access”.

The finance minister said that for the banks to further reduce their stock of non-performing loans, which amounted in October €24.1bn or almost half of the banks’ loan portfolio, will need “time and effort and a recovering economy”.

“This headline number is not necessarily indicative of the actual situation because a large chunk of these loans has already been restructured,” he said. “They are being serviced and the reporting treatment will keep on the NPL list for a while, for a year or a year and a half. But the fact that the economy is recovering strongly (and) unemployment coming down, obviously helps households and businesses to service their loans and that is what we are seeing happening”.


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Stelios Orphanides is a journalist at To contact Stelios Orphanides: [email protected]

  • Mist

    I would have thought putting money in the piggy bank was the top priority as the Russian debt is due in 2021. Ah I forgot, AKEL will get in at the next election and they will roll the debt over.