Cyprus Leads Greece, Hungary and Others as Government Debt Ratio Plunges to 48.5% in 2026

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Cyprus has performed better than Greece, Hungary, Ireland as well as other EU countries in terms of reducing its debt by making substantial repayments of loans, recording increased revenues and realizing positive economic growth in recent years. According to the Statistics Office of Eurostat, which released the news on 21 October 2026, the gross government debt in Cyprus dropped significantly to 48.5 percent in the second quarter, compared to 51.5 percent in March. Thus, Cyprus recorded the largest debt reduction in the quarterly comparison in the European Union, despite higher gross government debt in the EU, according to the statistics office.

New figures released by Eurostat on Wednesday, 21 October 2026, show that Cyprus reduced its government debt-to-GDP ratio to 48.5% in the second quarter of the year. This was the biggest quarterly fall recorded among European Union countries. While debt levels increased across the wider EU, Cyprus moved in the opposite direction. Strong economic growth, higher tax revenue and large loan repayments helped the country improve its financial position. The latest results reveal a striking difference between Cyprus and some of Europe’s biggest economies.

Cyprus Achieves Europe’s Biggest Quarterly Debt Ratio Reduction

Cyprus recorded a remarkable improvement in its government debt figures during the second quarter of 2026.

Its debt-to-GDP ratio fell from 51.5% in March to 48.5% in June. This marked a decline of three percentage points in just three months.

The improvement was even greater compared with 2025. During the second quarter of last year, Cyprus had a debt ratio of 58.1%.

Eurostat reported an annual reduction of 9.5 percentage points.

The country also reduced the actual amount it owed. Government debt dropped from €20.03 billion in March to €19.20 billion in June.

A year earlier, the figure stood at €21.70 billion.

Comparative European Performance

Cyprus’s fiscal trajectory stands in stark contrast to the wider regional trend. While EU aggregate debt climbed to 82.9%, Cyprus, Greece, Hungary, and Ireland managed notable reductions, with Cyprus leading the quarterly decline.

Greece, Hungary and Ireland Follow Cyprus in Major Debt Reductions

Cyprus was not the only European country to reduce its debt burden.

Greece recorded the second-largest quarterly reduction, with its debt ratio falling by 2.7 percentage points.

Hungary followed with a two-percentage-point decline. Ireland recorded a fall of 1.8 percentage points.

Croatia reduced its ratio by 1.6 percentage points, while Slovakia achieved a one-percentage-point decline.

However, the annual comparison showed a different leader.

Greece recorded the largest yearly improvement, reducing its debt ratio by 11.2 percentage points.

Cyprus ranked second with a reported 9.5-percentage-point reduction.

Slovenia and Portugal also made progress. Their annual declines reached 4.5 and 3.4 percentage points respectively.

These figures show that several European economies are reducing debt, although Cyprus led the latest quarterly rankings.

Cyprus Makes Huge Loan Repayments to Cut Its Debt Burden

A major loan repayment helped explain the sharp fall in Cyprus’ outstanding debt.

According to the Cyprus Public Debt Management Office, the government repaid approximately €1.039 billion in loans during the second quarter.

This included a €1 billion repayment to the European Stability Mechanism.

The government also repaid €125 million in Treasury bills and approximately €1 million in retail bonds.

At the same time, Cyprus received €177 million from the European Commission through its SAFE defence-financing programme.

It received another €35 million from the Council of Europe Development Bank for infrastructure projects.

These transactions show that large repayments played an important role in cutting government debt, even as new borrowing partly offset the reduction.

Strong Tax Revenue Helps Cyprus Build a €1.59 Billion Budget Surplus

Cyprus’ financial improvement continued beyond the second quarter.

Figures released by the Cyprus Statistical Service on 8 October showed that the government recorded a €1.589 billion budget surplus between January and August 2026.

A surplus means the government received more money than it spent.

Total revenue reached €10.842 billion, increasing by 6% compared with the same period in 2025.

Government spending increased more slowly, rising by 3.3% to €9.253 billion.

Income and wealth tax revenue climbed by 14.2%, reaching €3.080 billion.

Net value-added tax revenue also increased by 14.7% to €2.345 billion.

This stronger financial position helped Cyprus manage its debt more effectively.

Cyprus Economy Grows as Business Activity Strengthens in 2026

Economic growth also supported Cyprus’ progress.

Updated figures released on Tuesday, 20 October, showed that the country’s economy grew by 3.3% during the second quarter of 2026 compared with the same period last year.

Several industries supported this expansion.

Retail and wholesale trade performed well. Information and communication services also contributed to growth.

Financial services, insurance and construction provided additional support.

This matters because a growing economy can make government debt easier to manage.

However, Cyprus achieved two improvements together.

Its economy expanded, while the amount of government debt actually fell.

This combination helped produce the country’s sharp reduction in its debt-to-GDP ratio.

European Union Debt Climbs While Cyprus Moves Ahead

The latest Eurostat figures reveal a surprising contrast between Cyprus and the wider European Union.

Across the EU, the government debt ratio increased from 82.5% in the first quarter to 82.9% in the second quarter of 2026.

The euro area’s ratio also increased, reaching 88.8%, compared with 88.4% in the previous quarter.

Fifteen EU countries recorded higher debt ratios. Ten reported reductions, while two remained unchanged.

Greece still had the EU’s highest debt ratio at 140.8%.

Italy followed with 139.9%, while France recorded 119.1%.

Belgium and Spain also exceeded 100%.

Against these figures, Cyprus’ 48.5% ratio highlights its much lower debt burden.

Cyprus Tourism Faces Challenges Despite Stronger Government Finances

Cyprus’ improving finances come as tourism faces mixed conditions.

Official figures released on Monday, 19 October, showed that the country welcomed 580,889 tourists in September 2026.

This represented a 1.8% increase compared with September 2025.

However, arrivals between January and September fell by 5.6% to approximately 3.40 million.

The United Kingdom remained the largest source of visitors in September.

The European Commission has warned that regional conflict and higher energy prices could affect tourism activity.

Stronger public finances may give Cyprus more room to respond to future challenges.

However, lower debt does not automatically mean greater tourism investment.

Cyprus Debt Outlook Signals Further Progress Through 2027

The European Commission expects Cyprus’ debt ratio to continue declining.

Its May 2026 forecast projected government debt at 50.4% of GDP by the end of 2026 and 45.5% in 2027.

The latest June figure of 48.5% is already below that earlier year-end forecast.

However, borrowing needs, public spending and economic conditions could still change the final result.

Cyprus is taking the lead in economic growth, government debt repayment, and stable income. Cyprus has reduced its government debt to 48.5 percent, which allowed them to overtake Greece, Hungary, Ireland, and others in terms of paying off debts within the last three months. Most European countries are in debt, but Cyprus is following the path of economic growth. However, it is necessary to increase the trend of economic growth and the country’s prosperity.