ECB flags Cyprus data gaps in eurozone report

The European Central Bank (ECB) has reported that Cyprus continues to face significant data reporting weaknesses, as it published its latest biennial statistical quality review assessing euro area member states.

The report examined the completeness, consistency and methodology of balance of payments and international investment position data across the eurozone up to the second quarter of 2025.

While acknowledging some improvements, the ECB repeatedly highlighted Cyprus’ shortcomings in meeting euro area transparency standards, particularly in the quality and consistency of its monthly data.

The central bank said that weaknesses in Cyprus’ reporting have a direct negative impact on the overall quality of euro area aggregates, especially at the monthly level.

It found that national data often show inconsistencies with quarterly figures or unreliable distributions of transactions across reporting periods.

In particular, Cyprus was criticised for routinely allocating all foreign direct investment financial transactions and related income to the final month of each quarter, distorting the statistical picture.

The report also pointed to delays in data submission, noting that the Central Bank of Cyprus transmitted second quarter 2024 figures five working days late, although their overall quality was deemed acceptable.

Further concerns were raised over structural gaps in reporting, including the absence of any recorded transactions or positions in financial derivatives for the government sector.

The ECB also said Cyprus underestimates income received by shareholders from euro area investment funds, contributing to broader distortions at regional level.

It added that intercompany debt securities account for more than 1 per cent of total internal lending in Cyprus, placing it among a small group of countries with similar characteristics.

Despite efforts to improve data quality, including adjustments made in September 2021 to enhance geographical allocation of counterparties, the report said these changes introduced a statistical break in the series.

The ECB further noted limitations in the geographical detail of data relating to special purpose entities, particularly within foreign direct investment and other investment categories.

“Malta and Cyprus continue to face certain challenges in working to improve the general quality of their data,” the ECB said.

The report stressed that improving data quality, expanding coverage of special purpose entities and eliminating remaining inconsistencies remain key priorities for Cyprus.

Beyond Cyprus, the ECB highlighted broader challenges across the euro area, including classification errors, delays and gaps in financial reporting among several member states.

It pointed to developments at global level, including the International Monetary Fund’s (IMF) updated statistical manual released in March 2025, which reflects structural changes in the global economy such as digitalisation and increasing financial complexity.

The ECB confirmed that euro area data will continue to follow the previous standards until a coordinated transition to the updated framework is implemented.

To manage this shift, the European System of Central Banks has endorsed a medium-term strategy aimed at aligning reporting standards across member states by the end of the decade.

The report also highlighted efforts to improve transparency, including enhanced breakdowns of portfolio investment data and expanded digital tools to monitor cross-border financial linkages.

It added that national authorities are being supported through training initiatives and updated technical guidance to address structural weaknesses in their reporting systems.

Despite the identified issues, the ECB said that overall balance of payments and investment position data remain broadly consistent with other datasets, such as trade statistics and sector accounts.

However, it stressed that timely, accurate and consistent data reporting is essential for monitoring economic stability and supporting policymaking across the euro area.