18/09/2015 06:15
The profile of the general government debt continues to improve, as Cyprus prepares to tap international markets later this year.
According to the Public Debt Management Office (PDMO) data processed by StockWatch, as at the end of the second quarter of 2015, the weighted average duration marginally increased to 8,1 years from 8 years at the beginning of the year and from 7,8 years at the end of the second quarter of 2014.
The average maturity of the public debt reached a low of 4,7 years at the end of 2012 but since then it is constantly increasing due to the loans extended to Cyprus under the economic adjustment program.
The IMF's loans have a typical duration of 10 years while those by the European Stability Mechanism (ESM) vary between 13-17 years.
This trend is expected to continue until the end of the memorandum as long as the remaining balance is being given to Cyprus subject to the positive reviews it has to secure from the creditors.
So far a total of €6,5 bn has been given, €5,8 bn by the ESM and €0,7 bn by the IMF, out of a total of €10 bn agreed initially.
Cyprus is expected to exit the memorandum in March 2016 till when the rest of the funds will be gradually disbursed pending the creditors' positive assessments.
The gradual elongation of the debt maturity is important as it gives increasingly more "breathing space" to the government in repaying its debt, "postponing" cash outflows further into the future thus facilitating the state's efforts to streamline its operations and achieve a sustainable model.
As shown in the second table the debt maturity till the end of 2018 is quite comfortable with the amount due in 2015 expected to be covered in big part by the recently approved next tranche by the creditors.
The big maturities will start from 2019 but the government hopes that by then economic growth will be well established, thus aiding in covering the necessary repayments.
Due to the low interest of the ESM loans, and the gradual expirations of relatively high interest debt, interest expenses are expected to decline thus further improving the fiscal situation.
The government budget for 2016 recently approved by the cabinet, provides for a 16% reduction in interest expenses compared to 2015.
According to the Public Debt Management Office (PDMO) data processed by StockWatch, as at the end of the second quarter of 2015, the weighted average duration marginally increased to 8,1 years from 8 years at the beginning of the year and from 7,8 years at the end of the second quarter of 2014.
The average maturity of the public debt reached a low of 4,7 years at the end of 2012 but since then it is constantly increasing due to the loans extended to Cyprus under the economic adjustment program.The IMF's loans have a typical duration of 10 years while those by the European Stability Mechanism (ESM) vary between 13-17 years.
This trend is expected to continue until the end of the memorandum as long as the remaining balance is being given to Cyprus subject to the positive reviews it has to secure from the creditors.
So far a total of €6,5 bn has been given, €5,8 bn by the ESM and €0,7 bn by the IMF, out of a total of €10 bn agreed initially.
Cyprus is expected to exit the memorandum in March 2016 till when the rest of the funds will be gradually disbursed pending the creditors' positive assessments.
The gradual elongation of the debt maturity is important as it gives increasingly more "breathing space" to the government in repaying its debt, "postponing" cash outflows further into the future thus facilitating the state's efforts to streamline its operations and achieve a sustainable model.As shown in the second table the debt maturity till the end of 2018 is quite comfortable with the amount due in 2015 expected to be covered in big part by the recently approved next tranche by the creditors.
The big maturities will start from 2019 but the government hopes that by then economic growth will be well established, thus aiding in covering the necessary repayments.
Due to the low interest of the ESM loans, and the gradual expirations of relatively high interest debt, interest expenses are expected to decline thus further improving the fiscal situation.
The government budget for 2016 recently approved by the cabinet, provides for a 16% reduction in interest expenses compared to 2015.