Overview Of The Fiscal Report

Cyprus recorded a state budget deficit of €1.79 billion in 2025, according to the latest fiscal report from the Treasury. The report compares planned and actual revenues and expenditures and is submitted annually by the Accountant General within three months of the financial year’s end.

Fiscal Report Insights And Approval Process

The report was prepared by Accountant General Andreas Antoniades and submitted to Finance Minister Makis Keravnos on March 12, 2026. It was approved by the Cabinet on March 16 and later submitted to the House of Representatives on March 23. An audit by the Auditor General is also included, supporting the accuracy of the financial data.

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Revenue And Expenditure Trends

Revenues, excluding loan-related inflows, reached €10.05 billion in 2025, up from €9.57 billion in 2024, while expenditures rose to €10.15 billion from €9.89 billion. This resulted in a pre-borrowing deficit of €0.10 billion, compared to €0.32 billion the previous year.

Impact Of Loan Activities On The Fiscal Position

Once loan activity is included, the overall deficit widens. Loan drawdowns and repayments fell to €0.16 billion in 2025, down from €1.24 billion in 2024. At the same time, spending related to loan repayments and issuances declined to €1.85 billion from €2.53 billion. As a result, the total budget deficit increased to €1.79 billion, compared to €1.61 billion a year earlier.

The Central Role Of Taxation

Tax revenue remained the main source of state income, reaching €8.6 billion in 2025, up from €8 billion in 2024. This accounts for around 86% of total revenues. The structure remained broadly unchanged, with 44% coming from indirect taxes and 42% from direct taxes.

Key Expenditure Categories And Public Debt Overview

Spending on public sector wages, pensions and gratuities totalled €3.52 billion. Social benefits reached €2.02 billion, including a €0.82 billion state contribution to the General Healthcare System. Grants and contributions to public entities and international organisations amounted to €1.67 billion.

Total government debt, excluding intra-government borrowing, declined to €19.24 billion at the end of 2025, from €20.92 billion a year earlier. At the same time, intra-government borrowing increased to €13.21 billion from €12.03 billion.

Conclusion

The report shows a narrowing deficit before borrowing, alongside a higher overall deficit once loan activity is included. At the same time, tax revenues continue to support public finances, while government debt remains on a downward path.

Strategic Initiative For Strengthening Local Tourism

Cyprus is considering a targeted incentive scheme to support domestic tourism, as regional tensions in the Middle East continue to create uncertainty for the travel sector. Deputy Minister of Tourism Kostas Koumis said the proposal aims to encourage residents to stay in local hotels, helping to support demand during a potentially volatile period.

Regional Developments And Economic Impact

Koumis noted that tourism performance in Cyprus will depend on how the situation in the Middle East develops, particularly its duration and impact on travel flows. Despite the uncertainty, current expectations remain stable, although the sector is preparing for possible shifts in demand.

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Comprehensive Policy Response

Alongside potential incentives, the Ministry is working with industry stakeholders to coordinate its response. The focus is on ensuring that hotels and tourism businesses can adapt to changing conditions. This includes measures aimed at maintaining activity in the sector and supporting operators if external demand weakens.

Delivering A Message Of Stability

Officials continue to emphasize that Cyprus remains a safe and stable destination. Maintaining this perception is seen as key to supporting both tourism demand and investor confidence.

Support Package Overview

The Bank of Cyprus has announced a comprehensive support initiative designed to assist livestock farmers and other affected businesses amidst the challenges posed by the foot and mouth disease outbreak. The bank reiterated its commitment to standing by customers during emergency times while maintaining its role as a cornerstone of stability within the Cypriot economy.

Loan Payment Suspension And Relief

An integral element of the package is the suspension of loan instalments, covering both principal and interest obligations. Eligible borrowers enrolled in state-supported schemes can benefit from a payment moratorium of up to 12 months. This measure is strictly applicable to performing loans, ensuring that sound credit exposures receive the necessary relief to manage immediate financial pressures.

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Targeted Liquidity Support For Rapid Recovery

In parallel with the loan freeze, the bank is introducing tailored liquidity solutions aimed at meeting critical operational needs and expediting the recovery process for impacted enterprises. These facilities are crafted to minimize operational disruptions and help businesses resume their activities while mitigating short-term financial stresses.

Customer Support And Assistance

To streamline access to these emergency measures, the Bank of Cyprus has activated a dedicated support line. Customers can reach the specialised team by phone at 25-156000 from Monday to Friday, between 07:30 and 18:00. Additional support is available via email for further clarification or assistance.

By deploying these measures, the Bank of Cyprus underscores its commitment to supporting both individual and business clients, paving the way for a robust economic recovery in the face of unforeseen challenges.

Robust European Banking Framework

The European Banking Authority (EBA) said the EU and EEA banking sectors remain stable despite rising geopolitical tensions linked to the conflict in the Middle East. Data from the Q4 2025 risk dashboard, alongside new CRR3 and CRD6 regulations, show that banks continue to operate with strong capital, liquidity and asset quality.

Navigating Geopolitical Turbulence

Direct exposure of European banks to the Middle East is estimated at €132 billion, including €47 billion in loans to financial institutions and €33 billion to non-financial companies. These exposures account for less than 0.5% of total assets, limiting immediate systemic risk. However, indirect effects remain a concern. Higher energy prices, inflation and supply chain disruptions could affect sectors such as transport, construction and manufacturing.

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Financial Strength And Stability

Risk-weighted assets increased slightly to €10.2 trillion, while the common equity tier 1 ratio stood at 16.3%. Profitability also remained stable, with return on equity at 10.4% and net interest margin at 1.6%. At the same time, operating costs have risen, pushing cost-to-income ratios to their highest levels since March 2023.

Cyprus Banking Sector: Stability Amid Transition

The banking sector in Cyprus shows a similar pattern. According to the Central Bank of Cyprus, profitability declined by 13.9% in 2025, mainly due to lower net interest income. At the same time, total assets increased by 6.6% to €69.96 billion, while capital levels remain strong. The CET1 ratio reached 25.8%, well above the European average. Central Bank Governor Christodoulos Patsalides said these indicators show that the sector can absorb external shocks.

Looking Ahead

Geopolitical risks, including energy prices and inflation, remain key factors for the sector. Even so, capital and liquidity levels across Europe and Cyprus provide a buffer against potential shocks. The EBA expects no major capital shortfalls before 2030, supporting a stable outlook for the banking system.

Positive Outlook For Air Travel

Global air passenger demand is poised for a significant transformation, with projections indicating more than a twofold increase by 2050. The International Air Transport Association (IATA) outlines a compelling forecast in its latest long-term demand projections, emphasizing that emerging markets in Asia-Pacific and Africa will be at the forefront of this remarkable growth.

Detailed Forecast Scenarios

IATA’s analysis showcases three distinct scenarios. Under the mid-range scenario, passenger volumes are expected to soar from 9 trillion revenue passenger kilometers (RPKs) in 2024 to 20.8 trillion by 2050 – representing an annual growth rate of 3.1%. When examining a higher-growth scenario, the trajectory intensifies to 21.9 trillion RPKs, marking a 3.3% annual increase. Even the lower-growth scenario maintains robust performance, with projections reaching 19.5 trillion RPKs at an annual rate of 2.9%.

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Regional Performance And Strategic Opportunities

The report underscores marked regional disparities. Emerging markets, particularly in Asia-Pacific and Africa, are predicted to exhibit the fastest growth with projected compound annual rates of 3.8% and 3.6% respectively. In contrast, Europe and North America are expected to experience more modest growth at 2.5% and 2.8%. Specific routes, including intra-Africa and Africa-Asia-Pacific, are among the most dynamic, highlighting a rising need for strategic investments in aviation infrastructure and refined regulatory frameworks to support expanding markets.

Implications Of A Post-Pandemic Landscape

The analysis also reflects a lasting structural shift in aviation demand following the Covid-19 pandemic. Unlike previous downturns, the pandemic-induced collapse in passenger traffic has created a gap that is unlikely to fully close by 2050. Despite this, long-term demand remains resilient, albeit with a gradual deceleration in growth from the historic average, pointing to market maturation rather than diminished consumer interest.

Driving Economic And Social Development

IATA Director General Willie Walsh encapsulated the prevailing sentiment: “People want to travel.” He noted that the projected doubling of air travel demand by mid-century will not only drive economic and social development worldwide, but will also create considerable opportunities for job creation and infrastructure enhancement. This forecast provides critical insights for policymakers, aviation industry leaders, and energy suppliers as they plan for the future, ensuring that the sector continues to catalyze global progress.

Methodology And Future Outlook

The projections are based on IATA’s econometric model, which uses data on population trends, economic indicators and country-specific factors such as flight frequencies and aircraft capacity. The model is calibrated against historical data and shows an accuracy rate of around 98%.

Adjusted real GDP per capita remains the main driver in the forecast, reflecting its link to long-term demand for air travel. The analysis also considers different scenarios for the global energy transition, allowing for variations in future market conditions.

Air travel demand is expected to remain strong, supporting the case for continued investment in aviation infrastructure and regulatory frameworks. Growth is likely to be driven increasingly by emerging markets, shaping the sector’s development in the coming decades.

Overview Of A Contested Recovery

By 2026, Cyprus’s post-crisis recovery is widely presented as a success story, supported by investment-grade ratings, steady economic growth and a projected debt-to-GDP ratio of around 51%. However, a closer look at the financial adjustment suggests that the recovery came at a high cost. Estimates indicate a cumulative transfer and loss of wealth exceeding €40 billion, or more than twice the country’s 2013 GDP. This adjustment reflects the scale of the balance sheet restructuring required after the banking crisis and highlights long-term consequences for households and domestic capital.

Excessive Banking Leverage And Hypergrowth

By the end of 2012, Cyprus’s banking sector had expanded to €126.4 billion, equivalent to roughly 650% of GDP. This included domestic lending, exposure to Greece, holdings of Greek government bonds and assets linked to foreign operations. The system’s vulnerability became clear after the PSI restructuring, which erased €4.1 billion in value and weakened capital buffers. At the same time, €10 billion in emergency liquidity support masked growing deposit outflows, leaving the system increasingly fragile.

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The Bail-In Experiment And Political Gambits

March 2013 marked a turning point, as Cyprus became the first eurozone country to implement a bail-in. An initial proposal included a system-wide levy on deposits 6.75% for insured funds and 9.9% for uninsured deposits to raise €5.8 billion. Following the rejection of this proposal by parliament, a more concentrated restructuring was implemented. The burden shifted toward large banks and depositors, reshaping the structure of the financial system. Some analysts have argued that political decisions during this period influenced how losses were distributed, particularly between domestic stakeholders and international capital.

Controlled Demolition And Capital Bond Controversies

The resolution of the crisis on March 25, 2013, led to a fundamental restructuring of the banking sector. Greek operations of Cypriot banks were transferred to Piraeus Bank at reduced valuations, contributing to the collapse of the parent institutions.

At the same time, approximately €8 billion in uninsured deposits were written down, affecting clients of both Laiki Bank and Bank of Cyprus. In parallel, capital bonds, widely held by retail investors, lost around €2 billion in value. These measures stabilised the system but significantly reduced private wealth and had a lasting effect on public trust.

The Second Haircut And Dilution Of Domestic Ownership

In 2014, depositors’ funds converted into Bank of Cyprus shares at €1.00 were subsequently diluted when new investors entered at €0.24 per share. This resulted in a dilution of domestic ownership by approximately 76%. Within a relatively short period, local holdings lost substantial value, while an estimated €3 billion in wealth shifted to new investors. The episode remains central to debates about how the costs of the recovery were distributed.

The Burden Of Taxpayer Debt And The Citizenship By Investment Program

Despite the framing of the crisis response as a “no-bailout” model, public support played a key role. State interventions reached approximately €7 billion over several years to stabilise the banking system. At the same time, the Citizenship by Investment programme generated around €10 billion between 2013 and 2020. These inflows provided liquidity and supported the restructuring process, including the reduction of non-performing loans.

Shadow Lending And The Private Equity Impact

A significant part of the recovery involved the transfer of non-performing loans to Credit Acquiring Companies. By 2026, these portfolios reached €23.7 billion. Private investors acquired a large share of these assets at discounts of 60–75%, with estimated purchase values of €7–8 billion for claims worth significantly more. As these assets are restructured or recovered, the gap, estimated at around €10 billion, represents a transfer of value outside the domestic economy. At the same time, state-owned entities such as KEDIPES continue to manage remaining exposures, with part of the burden effectively shifting to the public sector.

Conclusion: The Unfinished Resolution

When combined, the various elements of the adjustment, including bail-in losses, capital bond write-downs, equity dilution, loan sales, state support and external inflows, point to a total impact of approximately €44 billion. Cyprus has since restored financial stability, returned to growth and reduced public debt. However, the longer-term effects on wealth distribution and public trust remain part of the broader recovery narrative.

Surging Numbers Underline A Shifting Retirement Landscape

Around 300,000 pensioners in Greece are either continuing to work or returning to employment after retirement, according to recent data. This marks an increase from the previous figure of 250,000, pointing to a growing trend among retirees.

Economic Pressures Drive Continued Employment

Financial need remains the main reason behind this shift. The average primary pension for 2026 is estimated at €975 gross after a 2.4% increase, while around 60% of pensioners receive less than €1,000 per month. As a result, many retirees continue working to cover basic expenses, reflecting broader pressure on household incomes.

Sector-Specific Trends And Policy Implications

In some professions, including medicine and law, returning to work is not always driven by financial need but also by a desire to remain professionally active. At the same time, recent policy changes have removed penalties that previously reduced pensions by up to 30% for those who continued working, making employment more viable after retirement.

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A Call For Policy Reassessment

The current trend raises two key policy questions. First, pension levels should be sufficient so that retirees are not forced to continue working to cover basic living costs. After decades of contributions, many expect to rely on their pensions without needing additional income. Second, those who choose to remain in the workforce should be able to do so without losing part of their pension. Continued employment should not reduce benefits that were built over a lifetime.

The data point to a broader need to review pension policies, as well as to ensure that retirement does not become financially uncertain for a growing share of the population.

Lovable, an AI-powered app-building platform valued at $6.6 billion, is expanding through acquisitions as it scales its product and team. The company is looking to integrate startups and teams into its ecosystem, focusing on areas that support product development and growth.

Founder-Driven Culture Fuels Innovation

In a recent statement on X, Lovable co-founder and CEO Anton Osika emphasized that many key team members joined the company straight from their own startups. “Many of the people in key roles at Lovable were founders right before joining us,” he stated, highlighting a culture designed to empower founder-types with autonomy and the freedom to drive initiatives.

Capturing Opportunities For Growth

Osika noted that the acquisition strategy is aimed at giving smaller teams and early-stage startups the opportunity to scale their products within a larger platform. The company is actively engaging with potential partners and exploring ways to integrate new projects into its structure.

Competitive Dynamics In The AI Landscape

Lovable is expanding at a time of growing competition in AI development tools. Platforms such as Cursor, Replit and Bolt, along with larger AI companies, are increasing pressure across the market, pushing companies to move faster on both product and expansion.

Robust Growth Underlines Strategic Focus

Despite fierce competition, Lovable is experiencing notable revenue growth. The company recently reported an increase in its annual recurring revenue (ARR) to $400 million from $200 million at the close of 2025, alongside the emergence of over 200,000 new vibe-coding projects daily. This impressive growth trajectory validates Lovable’s strategic investment in talent and technology.

Proven Track Record In M&A

Lovable has demonstrated its commitment to strategic acquisitions by previously integrating key assets, such as the acquisition of cloud provider Molnett in November to bolster its cloud infrastructure capabilities. This history underscores the company’s proactive approach in enhancing its technological and operational reach.

Looking Ahead

Lovable is expected to continue exploring acquisitions as it expands in the AI development space. The company remains focused on bringing in teams and startups that can strengthen its product and support further growth.

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Recent developments in cybersecurity have revealed a concerning evolution of the DarkSword exploit. Following the exposure of a sophisticated hacking campaign targeting iPhone users, cybersecurity professionals now report that a revised version of DarkSword has been released on GitHub, significantly lowering the barrier for malicious actors to compromise iOS devices running outdated operating systems.

New Version, Increased Risks

Researchers, including iVerify co-founder Matthias Frielingsdorf, warn that the leaked tools can be quickly adapted and reused. The latest version, built largely with HTML and JavaScript, allows attackers to target older iPhones without requiring deep knowledge of iOS systems. This increases exposure for devices that have not been updated, with a significant number of users still running earlier versions of the operating system.

Ecosystem Vulnerabilities And Expert Warnings

Security experts continue to stress that software updates remain the primary line of defense. Apple has issued an emergency patch for devices unable to upgrade to newer iOS versions, noting that the exploit affects only systems running outdated software. Keeping devices updated significantly reduces the risk of exploitation.

Legacy Exploit Mechanisms And Operational Impact

The leaked DarkSword code includes detailed inline comments explaining how the exploit operates. These outline steps, such as extracting data through HTTP requests and transferring information to external servers after access is gained. Sensitive data that can be targeted includes contacts, messages, call history and keychain information. The level of detail in the code also makes it easier for less experienced attackers to reuse and adapt the exploit. References within the code suggest links to additional targets, indicating that the activity may be part of a broader campaign.

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Comparative Landscape And Broader Implications

This significant update to DarkSword comes on the heels of another advanced iPhone hacking toolkit, Coruna, which was traced to tools developed by defense contractor L3Harris. The convergence of these sophisticated exploits underscores an escalating threat landscape where state-of-the-art tools leak into the cybercriminal ecosystem, magnifying risks for legacy devices. With Apple reporting that approximately one-quarter of all active iPhone and iPad devices run on older operating systems, the potential impact is vast.

Conclusion and Recommendations for Users

The emergence of a simplified version of DarkSword highlights how quickly advanced exploits can spread once made public. As accessibility increases, the gap between highly specialized tools and general use continues to narrow, raising the importance of timely updates and ongoing security awareness.