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Cyprus Narrows Current Account Deficit Amid Mounting External Liabilities

by THEFUTURE.TEAM

January 8, 2026

Improved Current Account Balance

Cyprus demonstrated fiscal improvement in the third quarter of 2025, with its current account deficit narrowing to €95.00 million from €116.10 million recorded during the same period last year. This progress, reported by the Central Bank of Cyprus, underscores a notable stabilization in the nation’s external economic engagements.

Adjusted Deficit Metrics

The central bank’s preliminary statistics reveal that, after adjusting for the effects of special purpose entities classified as non-residents, the current account deficit widened to €304.00 million in the third quarter of 2025 compared with €204.30 million in the corresponding quarter of 2024. This adjustment highlights the significant influence of cross-border financial activities on the overall deficit figures.

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Worsening International Investment Position

In its analysis of the international investment position, the central bank noted a deterioration, with the net liability position rising to €31.52 billion in Q3 2025 from €30.09 billion in Q2 2025. Even when discounting the impact of special purpose entities, the adjusted net liability position increased to €13.39 billion from €11.48 billion, indicating vulnerabilities in Cyprus’ international investment portfolio.

Rising External Debt and Financial Volatility

The upward trajectory of external debt further complicates Cyprus’ economic outlook. Gross external debt climbed to €234.87 billion in Q3 2025 from €232.99 billion in the previous quarter, alongside a modest increase in external financial assets in debt instruments, which reached €224.96 billion from €223.08 billion. Subsequently, the net external debt marginally increased by €6.30 million to €9.91 billion. Adjusted figures reveal a gross external debt of €59.82 billion, up from €59.04 billion, while the corresponding adjusted net external debt indicator slightly improved from -€24.31 billion to -€24.22 billion.

Strategic Implications

These developments have significant strategic implications for policymakers and investors alike. The improved current account balance provides a semblance of fiscal discipline amid escalating external liabilities. However, the persistent challenges reflected in the international investment position and rising external debt underscore the need for strategic reforms aimed at enhancing financial stability and investor confidence in Cyprus.

Conclusion

Overall, Cyprus’ financial metrics in Q3 2025 paint a mixed picture. While improvements in the current account balance are encouraging, the concurrent rise in external debt and liability positions call for a cautious approach. Stakeholders must weigh these factors carefully as they navigate an increasingly complex global economic landscape.

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Societe Generale Bank Cyprus Introduces Four-Day Workweek Under New Labour Agreement

The Societe Generale Bank – Cyprus has introduced a four-day workweek for employees during July and August under a renewed collective agreement with the banking union ETYK.

Setting A New Standard For Banking Institutions

Societe Generale Bank Cyprus employs around 100 staff members. The new agreement introduces a reduced working schedule during the summer months as part of the collective contract for 2023–2027.

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ETYK supported the introduction of the four-day schedule during negotiations for the agreement. Other financial institutions, including Bank of Cyprus, Eurobank Ltd, Alpha Bank, National Bank of Greece (Cyprus), the Housing Finance Organization, the Bankers Association representing personnel, KEIDIPES and several insurance subsidiaries, signed separate agreements with ETYK that do not include a four-day workweek.

Key Provisions And Broader Implications

The collective agreement introduces a four-day workweek during July and August. Employees will work their regular daily hours across four days on a rotational basis while banking services continue throughout the week.

Additional provisions in the agreement include several benefits for employees. Staff will receive a one-time bonus of €1,500 upon signing the contract, a three-day increase in annual leave, adjustments to salary scales and higher contractual loan limits.

Comparative Analysis With Industry Peers

The agreement differs from arrangements negotiated between ETYK and the Banking Employers Association. Under those agreements, employees received an additional six days of annual leave. The Societe Generale Bank Cyprus agreement provides a three-day increase, bringing total annual leave to 36 days, excluding public holidays.

The bonus structure also differs. Agreements with the Banking Employers Association include a total bonus of €4,500 paid in three installments in 2025, 2026 and 2027. Societe Generale employees receive a single payment of €1,500.

Looking Forward

ETYK said the introduction of a four-day workweek during the summer months reflects discussions about working conditions in the banking sector. The arrangement may contribute to broader discussions about work schedules and employee benefits within the financial industry in Cyprus.