Cyprus has achieved a remarkable decrease in public debt, standing out in the euro area with one of the largest reductions in government debt during the third quarter of 2025. According to Eurostat, the general government gross debt to GDP ratio in Cyprus fell by 6.1 percentage points compared to the same period in 2024, marking the third-largest decrease across the European Union.
This notable achievement comes as the broader euro area experienced an increase in its debt-to-GDP ratio, which rose to 88.5 per cent from 88.2 per cent at the end of the second quarter. Similarly, the EU as a whole saw its ratio climb from 81.9 per cent to 82.1 per cent during the same three-month period.
Public debt: Comparative Performance Among EU Nations
While Cyprus, alongside Greece and Ireland, successfully lowered its debt burden, sixteen other EU member states recorded an increase in their debt to GDP ratios. Romania faced the most significant rise, with an increase of 5.5 percentage points, followed closely by Poland at 5.0 percentage points, and Finland and Bulgaria also showing substantial growth.
As of the end of the third quarter of 2025, Greece held the highest debt ratio in the EU at 149.7 per cent, followed by Italy at 137.8 per cent. In stark contrast, the lowest ratios were registered in Estonia at 22.9 per cent and Luxembourg at 27.9 per cent, revealing a considerable fiscal disparity across the continent.
Composition of Debt in the Euro Area
The composition of public debt in the euro area remains largely uniform, with debt securities constituting 84.2 per cent of the total debt portfolio. Loans account for 13.3 per cent, while currency and deposits represent a smaller share at 2.6 per cent. Government involvement in intergovernmental lending also contributes to these figures, with this lending representing 1.4 per cent of GDP in the euro area and 1.2 per cent in the EU.
Quarterly Trends and Future Outlook
In the short term, eleven member states reported an increase in their debt ratios compared to the second quarter of 2025, while sixteen experienced a decrease. Notably, Luxembourg and Bulgaria saw the most significant quarterly rises, while Latvia and Greece joined Cyprus in reporting substantial debt contractions.
Eurostat highlighted that the government debt to GDP ratio had increased in both the euro area and the EU when compared to the third quarter of 2024. Specifically, the euro area ratio rose from 87.7 per cent to 88.5 per cent over the twelve-month period, underscoring the challenges facing many nations.
These statistics are crucial for assessing the economic health of member states and serve as key components of government finance statistics monitored by the European Commission. The persistent reduction in Cyprus’s debt ratio reinforces its status as one of the most improved regions in fiscal management across the EU.
