Nicosia, Cyprus. The Cyprus Fiscal Council said national public debt remains on a downward trajectory and is expected to fall below 60% of GDP once official 2025 figures are finalised. Council chairman Michalis Persianis said the decline is expected to continue in 2026 and likely in 2027.
Debt outlook and fiscal position
Persianis said there was no concern about the possible adoption of measures, citing the downward debt trajectory and expectations that debt will fall below 60% of GDP, despite anticipated overruns in the trajectory of net primary national expenditure. He added that the Republic’s liquid assets remain close to 10% of GDP, driven primarily by revenues from Kedipes, and said this provides additional options for the state.
Inflation expectations
Persianis said inflation is trending near zero in 2025, around 0.2%, and is expected to rise slightly above 2% in 2026.
Growth vulnerabilities and spending pressures
Persianis said that despite high growth rates, growth is driven by a small number of industries based on high-mobility foreign-controlled enterprises, increasing vulnerability for the economy and public finances. He said additional social spending requirements are expected to rise in coming years and reported significant funding needs for projects and actions expected to mature over the same period.
Infrastructure and other future needs
Persianis said the expected requirements include infrastructure spending on water, energy, transport, protection from natural disasters, and defence. He said several of these needs may mature to a degree that will not allow further delay in meeting them in coming years, creating a significant risk for public finances.
What measures do you think Cyprus should prioritise to meet rising infrastructure and social spending needs while maintaining a downward debt path?
