The year 2026 is shaping up to be one of the most critical fiscal stress tests in Cyprus’ modern history, as state loan obligations approaching €2.29 billion are set to mature.

According to Brief, the largest share is government bonds and external loans, while a significantly smaller portion relates to domestic loans maturing within the year. Managing these maturities is not merely a matter of figures and technical bulletins, but a test of Cyprus’ credibility in international markets and its ability to manage public debt.

What matures in 2026

1. Government bonds (EMTN bonds)

The majority of loan obligations maturing in 2026 concern external government bonds, known as EMTNs (European Medium-Term Notes), which were issued by the Ministry of Finance to meet fiscal financing needs.

Overall, bond maturities and other financing obligations due in 2026 are estimated at around €2.29 billion, equivalent to 2.6% of the expected GDP for the year.

Although detailed maturity dates for each bond are not published in a consolidated format by the Ministry of Finance, 2026 includes bonds that were originally issued to extend the average maturity of public debt. The broader financing programme indicates that Cyprus will return to international bond markets with new issuances—including a separate 10-year bond issue in early 2026—to cover part of the maturities and spread repayments over a longer time horizon.

2. External loans from the European Stability Mechanism (ESM)

Loans granted to Cyprus under the post-2013 economic support programme continue to mature. The first principal repayment to the ESM took place in 2025, with repayments continuing annually until 2031.

As such, 2026 includes scheduled ESM repayment instalments as part of the state’s annual financing programme.

3. Domestic loans and other debt instruments maturing in 2026

Part of the domestic loans issued in previous years will mature in 2026. For example, a €250 million loan to the Cyprus Housing Finance Corporation (HFC) is due to mature within the year.

In addition, the issuance of six-year bonds aimed at retail investors is planned for 2026, with scheduled offerings in March, July, October and December. These issuances allow private individuals to participate directly in the financing of public debt.

How these obligations will be covered

The government plans to combine refinancing and the use of cash reserves to meet the 2026 maturities without placing excessive strain on public finances:

Refinancing through new bond issuances: The issuance of a new €1 billion 10-year bond is a central tool for replacing part of the maturing debt. The very strong demand for these bonds reflects sustained investor confidence.

Cash buffers and fiscal surpluses: With state cash reserves estimated at €3.9 billion at the end of 2025, alongside continued fiscal surpluses, Cyprus can cover part of its obligations without resorting to large-scale new borrowing.

The period after 2026

Cyprus plans to maintain a steady presence in international markets during 2026–2028, with around 75% of financing needs expected to be covered from external sources, mainly through new EMTN issuances.

This debt management strategy remains critical, despite public debt continuing to decline as a percentage of GDP, projected at 51% in 2026, and despite the fact that reliance on international markets carries inherent risks. Interest rate fluctuations, geopolitical tensions and liquidity conditions may affect borrowing costs and the smooth servicing of obligations.