Cyprus maintains rare budget surplus as EU deficits persist

Cyprus maintained one of the strongest fiscal positions in the European Union in 2025, according to figures from Eurostat, recording a budget surplus while most member states posted deficits.

Specifically, the figures showed that Cyprus was among only a handful of countries to achieve a government surplus (3.4 per cent of GDP), alongside Denmark (2.9 per cent), Ireland (1.8 per cent), Greece (1.7 per cent) and Portugal (0.7 per cent).

Cyprus and its fellow fiscal outliers mentioned above defied the deficit-heavy trend seen across the rest of the EU.

In addition, according to preliminary fiscal results released by the Cyprus Statistical Service (Cystat), the country recorded a budget surplus of €1.24 billion, reflecting a solid performance in public finances.

The same data indicated that public debt stood at €20.08 billion, corresponding to 55 per cent of GDP, placing Cyprus comfortably below the EU’s 60 per cent reference threshold.

Across the euro area, the government deficit to GDP ratio edged down slightly from 3.0 per cent in 2024 to 2.9 per cent in 2025, while in the EU it remained unchanged at 3.1 per cent.

At the same time, government debt levels increased, with the euro area ratio rising from 87.0 per cent to 87.8 per cent and the EU ratio climbing from 80.7 per cent to 81.7 per cent.

Eurostat stated that the figures form part of its Excessive Deficit Procedure notification, based on data reported by member states under the ESA 2010 system of national accounts.

In contrast to the broader European trend, Cyprus’ fiscal position remained resilient, underpinned by consistent surpluses throughout the year.

Quarterly data showed that Cyprus recorded a surplus of 4 per cent of GDP in the fourth quarter of 2025, following surpluses of 2.8 per cent in the third quarter, 1.8 per cent in the second quarter and 5 per cent in the first quarter.

This continued a pattern seen in 2024, when the country posted quarterly surpluses ranging between 3.1 per cent and 4.8 per cent, highlighting sustained fiscal stability.

The broader EU picture, however, remained more challenging, with eleven member states recording deficits at or above 3 per cent of GDP.

The largest deficits were observed in Romania at 7.9 per cent, Poland at 7.3 per cent, Belgium at 5.2 per cent and France at 5.1 per cent.

In terms of debt, Cyprus also showed improvement, with one of the largest reductions in debt-to-GDP ratio recorded across the bloc.

Compared with the fourth quarter of 2024, Cyprus’ debt ratio declined by 7.7 percentage points, placing it among the strongest-performing countries alongside Greece, Ireland and Portugal.

On a quarterly basis, Cyprus also recorded a notable drop of 5.3 percentage points in debt levels between the third and fourth quarters of 2025.

Across the EU, debt remained unevenly distributed, with the highest levels recorded in Greece at 146.1 per cent, Italy at 137.1 per cent, France at 115.6 per cent, Belgium at 107.9 per cent and Spain at 100.7 per cent.

By contrast, the lowest debt ratios were seen in Estonia, Luxembourg, Denmark and Bulgaria, all below 30 per cent of GDP.

At the aggregate level, government expenditure and revenue ratios increased in both the euro area and the EU in 2025.

Government expenditure in the euro area stood at 49.8 per cent of GDP, while revenue reached 46.9 per cent, with corresponding figures for the EU at 49.5 per cent and 46.4 per cent.

Quarterly figures showed that in the fourth quarter of 2025, the euro area deficit stood at 3.0 per cent of GDP, while the EU recorded a slightly higher deficit of 3.2 per cent.

During the same period, government revenue in the euro area rose to 47.3 per cent of GDP, supported by an increase of around €36 billion in absolute terms.

Government expenditure in the euro area also increased, reaching 50.3 per cent of GDP following a rise of approximately €35 billion.

In the EU, revenue climbed to 46.8 per cent of GDP, with an increase of about €43 billion, while expenditure rose to 50.0 per cent of GDP after growing by roughly €47 billion.

Eurostat also reported that government debt composition remained largely stable, with debt securities accounting for 84.1 per cent in the euro area and 83.5 per cent in the EU, while loans represented 13.5 per cent and 14.2 per cent respectively.

The statistical office added that currency and deposits made up a smaller share, at 2.4 per cent in both the euro area and the EU.

The figures also showed that intergovernmental lending stood at 1.3 per cent of GDP in the euro area and 1.1 per cent in the EU at the end of the fourth quarter of 2025.

Cyprus’ performance stood in contrast to wider European trends, with the country maintaining strong fiscal discipline and declining debt levels, reinforcing its position as one of the more stable economies in the region.