Cyprus Stands Out in EU with Strong Fiscal Surplus and Declining Debt in 2025

Cyprus emerged as one of the strongest fiscal performers in the European Union in 2025, according to data released by Eurostat, achieving a budget surplus at a time when most member states continued to run deficits. The figures indicate that Cyprus was among a small group of countries to record a government surplus, reaching 3.4 per cent of GDP. It joined Denmark at 2.9 per cent, Ireland at 1.8 per cent, Greece at 1.7 per cent and Portugal at 0.7 per cent, standing in clear contrast to the deficit-heavy trend across the majority of EU economies.

Further supporting this positive outlook, preliminary fiscal data published by the Cyprus Statistical Service (Cystat) showed that the country registered a budget surplus of €1.24 billion, reflecting a robust performance in public finances. At the same time, public debt was reported at €20.08 billion, equivalent to 55 per cent of GDP, placing Cyprus comfortably below the European Union’s benchmark threshold of 60 per cent.

Across the wider euro area, the government deficit-to-GDP ratio saw a slight improvement, declining from 3.0 per cent in 2024 to 2.9 per cent in 2025, while in the EU overall the ratio remained unchanged at 3.1 per cent. Despite this marginal progress, debt levels continued to rise. In the euro area, the debt-to-GDP ratio increased from 87.0 per cent to 87.8 per cent, while in the EU it climbed from 80.7 per cent to 81.7 per cent.

Eurostat clarified that these figures form part of its Excessive Deficit Procedure notification, drawing on data submitted by member states under the ESA 2010 system of national accounts. Against this broader European backdrop, Cyprus maintained a resilient fiscal stance, supported by consistent budget surpluses throughout the year.

Quarterly figures illustrate this stability, with Cyprus recording a surplus of 4 per cent of GDP in the fourth quarter of 2025. This followed earlier surpluses of 2.8 per cent in the third quarter, 1.8 per cent in the second quarter and a notably strong 5 per cent in the first quarter. This pattern continues the trend seen in 2024, when quarterly surpluses ranged between 3.1 per cent and 4.8 per cent, underscoring sustained fiscal strength.

Elsewhere in the EU, fiscal pressures remained pronounced, with eleven member states posting deficits at or above 3 per cent of GDP. The largest deficits were recorded in Romania at 7.9 per cent, Poland at 7.3 per cent, Belgium at 5.2 per cent and France at 5.1 per cent.

In terms of public debt, Cyprus also demonstrated significant improvement, recording one of the largest reductions in its debt-to-GDP ratio across the bloc. Compared with the fourth quarter of 2024, the country’s debt ratio fell by 7.7 percentage points, placing it among the strongest performers alongside Greece, Ireland and Portugal. On a quarterly basis, Cyprus also saw a substantial decline of 5.3 percentage points between the third and fourth quarters of 2025.

Debt levels across the EU remained uneven, with the highest ratios observed in Greece at 146.1 per cent, Italy at 137.1 per cent, France at 115.6 per cent, Belgium at 107.9 per cent and Spain at 100.7 per cent. In contrast, the lowest debt levels were recorded in Estonia, Luxembourg, Denmark and Bulgaria, all of which maintained ratios below 30 per cent of GDP.

At the aggregate level, both government expenditure and revenue increased across the euro area and the EU in 2025. In the euro area, government expenditure reached 49.8 per cent of GDP, while revenue stood at 46.9 per cent. Corresponding figures for the EU were 49.5 per cent and 46.4 per cent respectively.

Looking specifically at the fourth quarter of 2025, the euro area recorded a government deficit of 3.0 per cent of GDP, while the EU posted a slightly higher deficit of 3.2 per cent. During the same period, government revenue in the euro area rose to 47.3 per cent of GDP, supported by an increase of approximately €36 billion in absolute terms. Expenditure also grew, reaching 50.3 per cent of GDP after rising by around €35 billion.

In the EU as a whole, revenue increased to 46.8 per cent of GDP, reflecting a gain of about €43 billion, while expenditure climbed to 50.0 per cent of GDP following an increase of roughly €47 billion.

Eurostat also noted that the composition of government debt remained broadly stable. Debt securities accounted for 84.1 per cent of total debt in the euro area and 83.5 per cent in the EU, while loans represented 13.5 per cent and 14.2 per cent respectively. Currency and deposits made up a smaller share, standing at 2.4 per cent in both the euro area and the EU.

Additionally, intergovernmental lending was reported at 1.3 per cent of GDP in the euro area and 1.1 per cent in the EU by the end of the fourth quarter of 2025.

Overall, Cyprus’ fiscal performance diverged markedly from broader European trends, with the country maintaining strong budget discipline and achieving declining debt levels. This solid financial position reinforces its standing as one of the more stable and resilient economies within the European Union.

By fLEXI tEAM