Cyprus leads EU in non-performing government loans

Cyprus recorded the highest level of non-performing loans in the European Union in 2024, highlighting a key vulnerability in public sector balance sheets, according to Eurostat.

The data published by Eurostat showed that government guarantees are the most common form of contingent liabilities across EU countries, typically covering liabilities and, in some cases, assets of third parties.

In 2024, the Netherlands recorded the highest level of government guarantees, amounting to 31.0 per cent of GDP.

Finland followed with government guarantees equal to 17.0 per cent of GDP, while Italy recorded a level of 14.6 per cent of GDP.

At the opposite end of the scale, Ireland, the Czech Republic and Bulgaria recorded government guarantees equal to or below 1 per cent of GDP.

Eurostat reported that in most EU countries the central government acts as the main guarantor.

However, notable levels of local government guarantees were observed in Finland, Sweden, France and Denmark.

Eurostat also highlighted wide variation in liabilities of public corporations classified outside general government across EU countries in 2024.

Germany recorded the highest level of such liabilities at 84.4 per cent of GDP, followed by the Netherlands at 73.1 per cent, Luxembourg at 65.0 per cent and France at 61.9 per cent.

By contrast, Cyprus recorded one of the lowest levels of public corporation liabilities, amounting to 7.3 per cent of GDP.

Similarly low levels were reported by Slovakia at 3.4 per cent of GDP, Spain at 4.3 per cent and Romania at 8.7 per cent.

Eurostat said that Cyprus remained the country with the highest stock of non-performing loans held by general government in 2024.

These non-performing loans in Cyprus stood at 9.0 per cent of GDP, well above levels recorded elsewhere in the EU.

In all other EU countries, non-performing loans remained below 1 per cent of GDP.

The highest levels after Cyprus were reported by Croatia at 0.8 per cent of GDP, Greece at 0.6 per cent and Sweden at 0.5 per cent.

Eurostat also examined liabilities related to off-balance public-private partnerships, which it said remained limited across the bloc.

Such liabilities were below 2 per cent of GDP in all EU countries, while nine member states recorded no liabilities of this type.

Portugal recorded the highest share of off-balance public-private partnership liabilities at 1.2 per cent of GDP.

Slovakia followed with liabilities equal to 1.0 per cent of GDP, while Latvia recorded 0.6 per cent of GDP.

Eurostat said these PPP-related liabilities are mainly linked to motorway construction projects.