Cyprus retains the capacity to service its debt, the European Commission said in its latest post-programme surveillance assessment published on Tuesday.
The Commission carries out a post-programme surveillance (PPS) twice a year on euro-area member states that have drawn financial assistance.

In March 2013, Cyprus clinched a €10 billion loan from the European Union and the International Monetary Fund to bail out its troubled economy and oversized banking system.

According to the Commission, the debt-servicing capacity of Cyprus remains stable, driven by the relatively long maturity of the debt portfolio, large cash buffers, low gross financing needs and the continuously declining debt ratio.
“The macroeconomic outlook continues to be positive,” the report said.
Real GDP growth in Cyprus maintained its strong momentum in the first half of 2025, expanding by 3.6 per cent year-on-year.

Employment grew by 1.7 per cent in the first half of 2025, supported by the inflow of foreign workers, while unemployment fell to record lows of 4.6 per cent in Q2 2025.
Inflation declined sharply in the second quarter of 2025, reflecting a considerable easing of energy and non-energy industrial goods prices and, to a lesser extent, food prices. Headline inflation is expected to converge around 2.0 per cent by 2027.
Cyprus’ fiscal performance and outlook “remain solid”, the Commission said. The budget surplus increased to 4.1 per cent of GDP in 2024 compared to 1.7 per cent of GDP in 2023.
The Cypriot financial sector remains robust, with banks sustaining strong profitability and further strengthening already firm capital positions amid ample liquidity.
“The Cypriot government maintains low financing needs, a strong cash position, and a favourable debt maturity profile, ensuring resilience to short-term refinancing and liquidity risks,” the report reads.
“Cyprus maintains a strong cash position, standing at €3.9 billion as at the end of September 2025 (approximately 11 per cent of GDP), covering 1.3 times the gross financing needs of the next 12 months.”

Regarding Cyprus’s debt distribution, 34.1 per cent of debt is based on a floating interest rate, mostly made up of European Stability Mechanism (ESM) loans.
Of the remainder, 27.4 per cent is held by the European Central Bank. All outstanding debt securities are denominated in euro, eliminating foreign exchange rate risk.

The first loan repayment to the ESM – of €350 million – is scheduled for December 2025, while an amount of approximately €1 billion is scheduled to be paid each year in 2026-2031.