By Stelios Orphanides
The government repaid €614.9m to the Central Bank of Cyprus against its outstanding debt of €1.1bn on Monday at an annual interest rate of 3 per cent, the Public Debt Management Office (PDMO) said adding that it also paid accrued interest of €6.3m.
“This early repayment represents a projected reduction of public debt to gross domestic product (GDP) of 3.2 percentage points,” the PDMO said in an emailed statement on Monday.
“As this transaction is to be funded by the already existing cash surpluses of the government, without any additional issue of debt, it is forecast to bring the public debt to GDP ratio further down to 98.4 per cent at the end of 2017,” the PDMO added. “The projected cash reserves of the government at year-end 2017 are estimated to fully cover the financing needs of 2018, in line with the guidelines of the medium-term public debt management strategy”.
In September, the government had €1.4bn in cash deposited at the Central Bank of Cyprus according to the latter’s balance sheet.
Last year, public debt stood at €19.4bn or 107.1 per cent of the economy which is expected to expand 3.5 per cent or more this year in real terms. This year’s inflation rate is expected to be 1 per cent or less. The government is expected to generate a fiscal surplus of about 1 percentage point of economic output.