Cyprus recorded the highest level of non-performing loans in the European Union in 2024, according to new data from Eurostat, revealing significant vulnerabilities in public sector balance sheets.
- Cyprus recorded the highest level of non-performing loans in the European Union in 2024, according to new data from Eurostat, revealing significant vulnerabilities in public sector balance sheets.
This alarming statistic indicates that non-performing loans in Cyprus amounted to 9.0 per cent of GDP, starkly outpacing other EU nations, where levels remained below 1 per cent. Croatia, Greece, and Sweden followed with non-performing loans at 0.8 per cent, 0.6 per cent, and 0.5 per cent of GDP respectively.
Non-performing loans: Government Guarantees and Their Implications
The Eurostat report highlighted that government guarantees are the most prevalent form of contingent liabilities across EU member states. In Cyprus, the reliance on these guarantees reflects broader fiscal challenges. The Netherlands led the EU with government guarantees reaching 31.0 per cent of GDP, followed by Finland at 17.0 per cent and Italy at 14.6 per cent. In contrast, countries like Ireland, the Czech Republic, and Bulgaria reported guarantees at or below 1 per cent of GDP, showcasing a stark contrast in fiscal strategy and risk management.
Public Corporation Liabilities
In examining liabilities associated with public corporations, Germany reported the highest levels at 84.4 per cent of GDP, with the Netherlands and Luxembourg following closely behind at 73.1 per cent and 65.0 per cent respectively. Cyprus, however, maintained one of the lowest levels of public corporation liabilities at just 7.3 per cent of GDP, alongside Slovakia, Spain, and Romania, which also reported low figures.
Off-Balance Public-Private Partnerships
Eurostat’s findings also revealed limited liabilities related to off-balance public-private partnerships (PPPs) across the EU. In fact, these liabilities remained below 2 per cent of GDP in all member countries. Portugal had the highest share at 1.2 per cent, with Slovakia and Latvia following with 1.0 per cent and 0.6 per cent respectively. These PPP-related liabilities are predominantly tied to motorway construction projects, indicating a focus on infrastructure development.
The data from Eurostat paints a sobering picture of Cyprus’s fiscal health in the context of the broader European landscape. As the nation grapples with its financial obligations, the implications of high non-performing loans on economic stability and public trust are profound.
