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Cyprus’s Current-Account Deficit Widens Despite Economic Growth

Cyprus’ current account deficit widened sharply in 2025 and continued to deteriorate in the first half of 2026, despite ongoing economic growth, according to Eurobank Research.

Revised figures from the Central Bank of Cyprus put the 2025 deficit at 8.8% of GDP, up from the previous estimate of 6.4%. Meanwhile, the 2024 figure was revised down from 8.2% to 5.5%, reversing the earlier impression that Cyprus’ external position was improving.

Deficit Reaches €3.21 Billion In 2025

Following the revisions, the 2025 current account deficit increased by €870 million to €3.21 billion.

The largest adjustment came from primary income, where the estimated deficit rose by €1.42 billion, mainly reflecting net investment income. The goods trade deficit was revised upwards by €201 million, while net current transfers abroad increased by €108 million.

These changes were partly offset by an €855 million upward revision to the services surplus, largely driven by higher estimated earnings from telecommunications, computer and information services.

External Pressures Intensify In 2026

Cyprus’ current account deficit reached €2.42 billion in the first half of 2026, equivalent to 12.8% of GDP for the period, compared with 10.1% a year earlier. The deficit widened by €635 million, with most of the increase recorded in the second quarter.

The goods trade deficit grew by €441 million, while the services surplus declined by €432 million as payments for imported services increased faster than export earnings.

Surpluses in telecommunications, computer and information services fell by €212 million, while travel and financial services recorded declines of €183 million and €230 million, respectively. Higher earnings from intellectual property and other business services, alongside a €333 million improvement in primary income, partly offset the deterioration. Secondary income weakened by €94 million.

Imports And Tourism Add To The Pressure

Strong household consumption and business investment contributed to rising imports. Transport equipment and parts accounted for approximately 77% of the increase in goods imports during the first half of 2026.

Although such investment can support future productive capacity, its longer-term benefits depend on whether it generates additional output and income.

Tourism also provided less support. Revenues fell 6.2% year on year to €2.32 billion between January and August. After increasing by 4.6% in July, receipts declined by 3.4% in August, mainly due to fewer visitors.

Preliminary figures also showed a further widening of the goods trade deficit in July and August.

IMF Forecast Faces Upside Risk

The International Monetary Fund’s October 2026 World Economic Outlook projected a current account deficit of 7.7% of GDP for Cyprus in 2026, based on data available before the latest revisions.

Eurobank Research warned that the updated figures create a significant risk of the deficit exceeding that forecast.

However, the report stresses that the imbalance should be assessed in context. International businesses contribute to exports and employment, while profits transferred to foreign investors affect the income balance. Domestic consumption and investment also increase demand for imports.

How the deficit is financed and whether current investment generates future income remain important considerations.

Strengthening Cyprus’ External Position

Eurobank Research identifies several priorities for improving the country’s external balance, including expanding export markets, developing new products and services, and strengthening the skills of domestic businesses.

Closer links between local suppliers and international companies operating in Cyprus could also help distribute the benefits of growth more widely across the economy.

Other priorities include reducing dependence on imported energy through renewable investment and efficiency improvements, strengthening financial literacy and household saving, and improving access to business financing.

Together, these measures could gradually narrow the external deficit, strengthen Cyprus’ export capacity and support more resilient, sustainable economic growth.

Cyprus Company Registration: Two To Four Days, Unless Security Checks Intervene

Cyprus aims to register companies within two to four working days when applicants submit complete documentation. However, regulatory approvals, sanctions checks, foreign ownership and national security considerations can extend the process or prevent registration.

Energy, Commerce and Industry Minister Michael Damianou outlined the timeframe in a written response to MP Efrem Christou, who asked about company formation procedures and the checks required before approval.

Fast Registration Depends On Complete Documentation

Damianou said authorities seek to process complete applications within two to four working days, regardless of a company’s structural complexity. The timeframe also depends on whether applicants pay an additional fee for expedited processing.

According to the official incorporation requirements, the standard registration fee is €165, rising to €235 for companies without share capital. Expedited processing costs an additional €100.

Applicants must submit an approved company name, a memorandum and articles of association, and forms HE1, HE2 and HE3. Public companies must also provide form HE5.

Regulated Businesses Require Additional Approval

Companies operating in certain sectors must obtain prior clearance from the relevant authorities or professional bodies. These include medical and dental businesses, law firms, insurance and reinsurance companies, and firms supervised by the Cyprus Securities and Exchange Commission.

The Central Bank of Cyprus must also approve company names associated with payment institutions, electronic money and foreign exchange services. Additional restrictions apply to educational institutions using terms such as “university” or “college”, casino operators, broadcasters and wine producers.

Non-profit organisations seeking to register without “Limited” or “Ltd” in their names also require ministerial authorisation.

Sanctions And Foreign Ownership Trigger Extra Checks

Applications involving shareholders, directors or company secretaries subject to EU, UN or US sanctions receive additional scrutiny. Registration can proceed only if the competent sanctions authority does not prohibit it. Damianou noted that US sanctions are considered indirectly but have not been incorporated into Cyprus legislation in the same way as EU and UN restrictions.

Applications involving Turkish interests are also subject to additional review. Under procedures introduced around 20 years ago, the registrar must consult national security services before proceeding with registrations involving Turkish interests or businesses that could threaten the Republic’s security.

Damianou distinguished these cases from applications submitted by Turkish Cypriots, saying there is “no substantial difference” in how their registration documents are examined. Applications may nevertheless be refused if classified information raises concerns about national interests or national security.

Public Servants Face Separate Restrictions

Under Article 65 of the public service law, government employees cannot act as directors, company secretaries or shareholders in private or public companies without prior special permission from the finance minister.

Proposed Law Would Expand Registrar’s Powers

The government is also seeking to strengthen the Registrar of Companies’ authority to address potential security risks. An amendment to the companies law, submitted to Parliament on September 17, would allow the registrar to reject applications, refuse company filings or remove existing businesses from the register on grounds including national security, public order, public interest and the protection of state sovereignty.

The proposal, approved by the Council of Ministers on August 6, remains before the House commerce committee. It would allow authorities to withhold detailed justifications where disclosure could reveal sensitive information, while informing affected companies of the general grounds for decisions.

The bill follows parliamentary discussions about companies controlled by non-EU nationals, particularly those with Turkish ultimate beneficial owners, and possible implications for property ownership through foreign-controlled businesses. Further details are available in the proposed amendment and earlier parliamentary reporting.

Balancing Investment And Oversight

Cyprus is seeking to maintain an efficient company registration process while strengthening checks on ownership, sanctions compliance and potential security risks.

The two-to-four-day target supports the country’s appeal to entrepreneurs and international investors, but the actual timeline depends on the nature of the business, the documentation submitted and any additional regulatory or security reviews required.

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