Cyprus: 2025 Article IV Consultation-Press Release; and Staff Report
IMF Staff Country Reports, June 2, 2025
Source details
- Canonical URL
- Cyprus: 2025 Article IV Consultation-Press Release; and Staff Report
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Bibliographic details
- Published: June 2, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229012843.002
Economic outlook and risks
- Growth is expected to decelerate to 2.5 percent in 2025 and stabilize at 3 percent in the medium term as Cyprus shifts toward more investment-driven growth.
- The immediate outlook presents downside risks, while longer-term risks appear more balanced.
- An escalation of trade conflicts—particularly if this broadened to include services trade and foreign direct investment—poses an important downside risk.
Fiscal position and policy recommendations
- The fiscal surplus reached 4.3 percent of gross domestic product (GDP) in 2024.
- Public debt declined to 65 percent of GDP.
- Policy recommendations:
- Fiscal policy should continue to prioritize debt reduction to further build buffers against potential shocks.
- Given overheating risks, avoid new discretionary measures that would ease fiscal policy and add to inflationary pressures.
Financial sector and macroprudential stance
- The banking sector boasts substantial capital and liquidity buffers, with financial risks appearing well contained.
- The recent tightening of the macroprudential policy stance will further enhance these financial buffers.
Structural reforms and medium-term growth drivers
- Structural reforms aimed at enhancing judicial efficiency and boosting labor productivity are vital for fostering long-term growth.
- With employment levels already high, capital deepening will increasingly drive growth.
Key statistics and facts highlighted
- Growth: "2.5 percent" in 2025; "3 percent" in the medium term.
- Fiscal surplus: "4.3 percent of gross domestic product (GDP)" in 2024.
- Public debt: "65 percent of GDP".
- Publication: "Cyprus: 2025 Article IV Consultation-Press Release; and Staff Report".
Source: Cyprus: 2025 Article IV Consultation-Press Release; and Staff Report (IMF Staff Country Report 2025/117).
Content in this bundle
- 1. Real Sector