For the years 2025 and 2026, the Ministry of Finance, specifically the Public Debt Management Office, is following a policy of managing liquid reserves to cover financing needs for 6 to 9 months.

The office states that "maintaining sufficient precautionary liquidity allows greater flexibility in executing major funding operations, in case adverse conditions delay or disrupt market access."

As Brief reports, more detailed information will be presented today, October 21, by the Director or a representative of the Office to the Finance Committee during the presentation of the 2025 national budget.

The Office is already moving forward with a strategy that ensures annual financing needs do not exceed 10% of the corresponding annual GDP through 2030.

The main goal is to secure the necessary financial resources to meet funding needs that can be comfortably satisfied in normal market conditions.

The International Monetary Fund (IMF), which works closely with the Public Debt Management Office on risk assessment issues, states that "gross financing needs of up to 15% of GDP are acceptable for economies with high credit ratings." However, for Cyprus, a more conservative limit has been set, considering the lower market liquidity that may affect investor behavior during periods of market instability.

The Office notes that "there has been an expansion of the investor base and satisfactory oversubscription in bond issues, reflecting the state's ability to finance beyond the 10% of GDP threshold."

According to Brief, the debt repayment schedule remains at comfortable levels due to previous successful debt management strategies, and this policy will continue through 2025 and 2026.

Among the actions already being implemented this year are:

1. Short-term debt with an initial maturity of up to 12 months will not exceed 2% of total public debt for 2024, 2025, and 2026. This is intended to minimize refinancing costs and limit interest rate risk.

2. Portfolio management transactions, such as early repayments or buybacks, will be executed in a way that ensures the refinancing risk of outstanding public debt is kept to a minimum during 2024-2026.

The share of debt with variable interest rates saw a significant increase after 2013 due to borrowing by the Republic of Cyprus under the three-year Economic Adjustment Program with the European Commission, ECB, and IMF.

The Office aims to keep the share of variable-rate debt below 30% of total annual debt for 2024-2026, in order to limit fluctuations in total annual interest payments.

This portion of variable-rate debt primarily concerns borrowing from the European Stability Mechanism (ESM).

It should be noted that, although in the past the state took out variable-rate loans for infrastructure projects, the priority for the upcoming three-year period will be to secure fixed-rate loans.