articles | 18 November 2016

Cyprus government stocks up cash reserves

Cyprus’ government debt rose in September 2016 to €19.4bn from €18.7bn in June and €18.8bn in September 2015, mainly on accumulation of cash reserves by the government, the Public Debt Management Office said.

The government issued in July a seven-year €1bn bond and had modest success two months later, when it sought to buy back outstanding debt as in an attempt to smooth out future debt maturities. The buyback only managed a repurchase of bonds with a nominal value of €214m.

At the end of September, the government had almost €1.4bn deposited at the Central Bank of Cyprus plus €918.8m deposited at commercial banks, compared with €976.4m and €469m in June respectively, which reflect an overall increase in government deposits of €847m.

The government, which still has a non-investment grade, is facing debt maturities worth €451m next year and €945m in 2018, when repayment of the €2.5bn loan from the Russian Federation will begin, according to the debt management office. In 2019, debt maturities increase to below €2.2bn while those of 2020 are below €1.7bn.

The government is projected to generate a marginal budget gap this year after posting a deficit of 1% of economic output last year and expects it will produce a fiscal shortfall of 0.6% next year.

Source: Cyprus Mail

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