articles | 26 April 2022

Cyprus has EU’s second largest debt to GDP ratio drop

At the end of the fourth quarter of 2021, the government debt to GDP ratio in the euro area stood at 95.6%, compared with 97.5% from Q3 2021, with Cyprus recording the second-biggest decline, according to Eurostat.

In the EU, the ratio decreased from 89.9% at the end of the third quarter to 88.1% in Q4 2021.

In Cyprus, the government debt to GDP ratio decreased by 5.4% points compared to Q3 2021 and 11.4% points compared to Q4 2020.

For the euro area, the decrease in government debt is due to an increase in GDP and a slight decrease in the nominal debt in absolute terms, while for the EU, the nominal debt continued to increase slightly but was outweighed by the increase in GDP.

Compared with Q3 2020, the government debt to GDP ratio decreased in the euro area and the EU (90.0% to 88.1%).

The decreases are due to the increases in GDP outweighing the increase in government debt.

At the end of Q4 2021, debt securities accounted for 82.6% of the euro area and 82.3% of EU general government debt.

Loans made up 14.2% and 14.7%, respectively, and currency and deposits represented 3.1% of the euro area and 3.0% of EU government debt.

The highest ratios of government debt to GDP in Q4 2021 were recorded in Greece (193.3%), Italy (150.8%), Portugal (127.4%), Spain (118.4%), France (112.9%), Belgium (108.2%) and Cyprus (103.6%), over the EU average.

The rest of the member states had ratios lower than the EU average. The lowest was recorded in Estonia (18.1%), Luxembourg (24.4%) and Bulgaria (25.1%).

Compared with Q3 2021, seven Member States registered an increase in their debt to GDP ratio in Q4 2021, nineteen a decrease, while the ratio remained stable in Germany.

Increases in the ratio were observed in Slovakia (1.8% points), Czechia (1.5 pp), Latvia (1.3 pp), Bulgaria (0.9 pp), Romania (0.6 pp), and Malta (0.4 pp) and Sweden (0.3 pp).

The largest decreases were recorded in Greece (8.3 pp), Cyprus (5.4 pp), Slovenia (5.0 pp) and Italy (3.8 pp).

Compared with Q4 2020, seven Member States registered an increase in their debt to GDP ratio in Q4 2021 and 20 Member States a decrease.

Increases in the ratio were recorded in Czechia (4.2 pp), Malta (3.6 pp), Slovakia (3.3 pp), Romania (1.6 pp), Latvia (1.5 pp), Germany (0.6 pp) and Bulgaria (0.4 pp).

The largest decreases were observed in Greece (13.1 pp), Cyprus (11.4 pp), Portugal (7.8 pp), Croatia (7.5 pp), Denmark (5.4 pp) and Slovenia (5.1 pp).

Source: Financial Mirror

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