Cyprus recorded the highest non-performing loans across the European Union in 2024, signaling significant vulnerabilities within public sector balance sheets, according to Eurostat data.

Government Guarantees Under the Microscope

Eurostat’s report reveals that government guarantees remain the most prevalent form of contingent liabilities among EU nations, typically providing backing for both liabilities and occasionally assets of third parties. Notably, the Netherlands led with government guarantees reaching 31.0 per cent of GDP, followed by Finland at 17.0 per cent and Italy at 14.6 per cent of GDP. In stark contrast, Ireland, the Czech Republic, and Bulgaria each maintained guarantees at or below 1 per cent of GDP.

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Central And Local Government Roles

The analysis confirms that, in most cases, central governments serve as the primary guarantors. However, certain countries, including Finland, Sweden, France, and Denmark, exhibited significant involvement from local government bodies, underscoring diverse governance approaches in risk management across the EU.

Public Corporations And Off-Balance Liabilities

Beyond contingent liabilities, Eurostat detailed stark differences in liabilities held by public corporations outside the general government. Germany, for instance, faced the highest level at 84.4 per cent of GDP, while the Netherlands, Luxembourg, and France followed closely. Conversely, Cyprus, Slovakia, Spain, and Romania reported substantially lower levels, with Cyprus at an exceptionally modest 7.3 per cent of GDP.

Cyprus’ Elevated Non-Performing Loans

Of particular concern, Cyprus recorded non-performing loans equating to 9.0 per cent of GDP – a figure that dwarfs those of other EU nations, where levels remained below 1 per cent. Additional data from Croatia, Greece, and Sweden indicate marginally higher figures, yet they pale in comparison to Cyprus’s predicament.

Off-Balance Public-Private Partnership Liabilities

Liabilities linked to off-balance sheet public-private partnerships remain largely contained, not exceeding 2 per cent of GDP in any member state. Portugal, Slovakia, and Latvia reported the highest shares in this category, with liabilities primarily tied to motorway construction projects.