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Strategic Debt Management In Global Uncertainty: The Next Phase 2026-2028

Although the debt repayment timeline has been smoothed to comfortable levels, the success of previous debt management strategies paves the way for their continuation in the 2026-2028 strategy. With the global economic landscape unsettled by geopolitical tensions, evolving U.S. tariff policies, and exposure to the risks posed by climate change, maintaining a balanced repayment schedule remains a strategic imperative.

Maintaining A Manageable Debt Profile

The forthcoming mid-term public debt management report for 2026-2028 outlines strategic actions designed to sustain a balanced debt repayment schedule and an optimal residual maturity profile, effectively mitigating the risk of refinancing. Although the issuance of European Medium Term Notes (EMTN) in minimum reference sizes—typically around €1 billion per issuance—can create concentrated repayment obligations for smaller issuers such as the Cypriot Republic, evidence shows that the state has been successfully refinancing these obligations at ease.

Flexibility Through Extended Maturity

A key objective is to maintain an average debt maturity of no less than eight years. This duration provides the state the flexibility to recalibrate its strategy when needed, ensuring that borrowing remains within acceptable risk parameters. Concentrating a high debt load within a mid-term horizon could undermine the strategic aims of public debt management, particularly in an era marked by geopolitical tensions, U.S. protectionist measures, and the growing threat of climate-related disruptions. Any escalation in regional conflicts—such as heightened tensions between Israel and Hamas—as well as prolongation of the Russia-Ukraine dispute, could prompt the European Central Bank and other major financial authorities to adjust their monetary policies, with potentially adverse economic, financial, and societal consequences.

Mitigating Interest-Rate Volatility

The report further addresses interest rate fluctuations by setting a target to limit the share of variable-rate debt to no more than 35% of total annual borrowing for 2026, and 30% for 2027-2028. This cautious allocation is aimed at minimizing the volatility of annual interest expenses and strengthening forecast reliability for public finances, thereby preserving the state’s liquidity.

Strategic Borrowing In An Environment of Uncertainty

While recent years have seen the state secure variable-rate loans for infrastructure initiatives, prevailing high interest rates and the potential for further short-term increases have underscored the priority of fixed-rate financing within the current strategy. Should interest rates remain at current levels—contingent upon the smooth execution of the U.S. government’s plan without Middle Eastern escalations or additional negative shocks—fixed-rate borrowing continues to be the preferred option. Ultimately, the choice of borrowing instrument will be evaluated on a case-by-case basis to ensure optimal financing for infrastructure projects.

Cyprus Could Turn 30,000 Empty Buildings Into New Homes

Vacant Properties Could Be Renovated For Housing And Community Use

Cyprus has an estimated 30,000 vacant or abandoned buildings that could be renovated and brought back into use, potentially helping ease pressure on the housing market, particularly for renters.

Former parliamentary Environment Committee chairman Charalambos Theopemptou examined how other EU countries deal with vacant properties and outlined several measures Cyprus could consider.

Lessons From Europe

Countries such as Ireland, France, Spain and Portugal use different combinations of renovation grants, tax measures and urban renewal programmes to encourage owners to bring empty properties back into use.

Ireland offers grants of up to €50,000 for vacant homes and €70,000 for derelict properties, while France and Spain use tax measures in areas with high housing demand. Portugal supports renovation through a dedicated urban renewal fund. Cyprus currently offers grants of up to €40,000 for renovating a three-bedroom home.

Creating A National Register

Theopemptou suggested creating a comprehensive register of vacant, abandoned and dangerous buildings, with municipalities and communities working alongside the Interior Ministry and technical services.

Properties could be classified according to their condition, historical or architectural value and location. Buildings near schools, public transport, local centres or areas with demand for affordable housing could receive priority.

He also proposed combining financial incentives with simpler procedures and faster technical assistance for owners willing to restore unused properties.

Putting Empty Buildings To Work

Once renovated, vacant properties could provide affordable and student housing, small businesses, cultural spaces and other community facilities. Long-term leases, partnerships with owners, social enterprises and unused municipal buildings could also contribute.

Many properties may not require major reconstruction. Structural assessments, cleaning, basic repairs, energy improvements, accessibility upgrades and reconnection to utilities could be enough to return some buildings to use.

Theopemptou also called for faster permits for smaller renovation projects and greater use of EU funding linked to the Renovation Wave initiative. Local authorities could further improve transparency by publishing data on vacant properties, including how many have been classified as dangerous, renovated or returned to use.

Bringing more of Cyprus’s unused buildings back into circulation could increase the housing supply while revitalising neighbourhoods and improving quality of life.

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The Future Forbes Realty Global Properties
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