debt reduction — debt reduction — Cyprus has made notable strides in reducing its government debt ratio, achieving a decline to 54.6 per cent of GDP in the first quarter of 2026. This marks one of the largest reductions in debt ratios across the European Union, as reported by Eurostat.
At the close of March 2026, Cyprus’ general government gross debt stood at €20.09 billion, slightly up from €20.08 billion at the end of 2025. However, the debt-to-GDP ratio saw a significant drop from 55 per cent in the previous quarter and a remarkable decrease from 62 per cent recorded in the first quarter of 2025.
This 7.4 percentage point decline positions Cyprus second among EU member states, only surpassed by Greece, which experienced a fall of 9.4 percentage points. As overall debt levels rose in both the euro area and across the EU, Cyprus’ achievement stands out.
According to Eurostat, the euro area’s government debt ratio increased to 88.9 per cent of GDP in the first quarter of 2026, up from 87.7 per cent in the previous quarter. Similarly, the EU’s debt ratio rose from 81.8 per cent to 82.9 per cent during the same timeframe.
In the context of annual comparisons, both the euro area and the EU saw increases in government debt ratios, with the euro area moving from 87.2 per cent to 88.9 per cent and the EU from 81.4 per cent to 82.9 per cent. This backdrop makes Cyprus’ improvement even more significant.
Debt securities remain the predominant form of government debt, accounting for 84.3 per cent in the euro area and 83.6 per cent in the EU. Loans contribute to 13.2 per cent of euro area debt and 13.9 per cent for the EU, while currency and deposits represent 2.5 per cent in both contexts. Eurostat also noted intergovernmental lending at 1.3 per cent of GDP in the euro area and 1.1 per cent in the EU.
When examining debt ratios among EU countries, Greece has the highest at 143.5 per cent, followed by Italy at 138.9 per cent, France at 117.6 per cent, Belgium at 109.1 per cent, and Spain at 101.6 per cent. In contrast, the lowest ratios are found in Estonia at 25.2 per cent, Denmark at 26.8 per cent, Bulgaria at 28.5 per cent, and Luxembourg at 29.2 per cent.
Comparing changes from the fourth quarter of 2025, 17 EU member states recorded increases in their debt ratios, while eight saw declines. The largest increases were noted in Hungary, Lithuania, Luxembourg, Ireland, Croatia, Austria, France, Poland, and Italy, whereas the biggest declines were in Greece, with a 2.6 percentage points drop, followed by Bulgaria, the Netherlands, and Slovenia.
As the first quarter of 2025 is considered, 19 EU member states had higher debt ratios, while eight managed to lower theirs. The most significant annual increases were observed in Finland, Bulgaria, Poland, Romania, France, Luxembourg, and Belgium. Cyprus, through its impressive reduction, stands out as a country showing strong improvement in its fiscal health.
