Cyprus judicial delays hinder economic debt clearance

The 2026 interim report by the Cyprus Fiscal Council highlights that judicial system inefficiencies are the primary obstacle to managing the nation's remaining private debt. While banks successfully reduced their non-performing loan ratio to a historic low of 1.6% in April 2026, down from 5.5% in 2021, a massive €18.5 billion in debt—exceeding half of the 2025 GDP—has shifted to credit acquiring companies. This debt remains trapped due to systemic legal bottlenecks.

Cyprus currently suffers from the slowest court system in the European Union, with the time required to resolve first-instance cases rising to 709 days in 2024, compared to 605 days in 2023. The report notes that a lack of human and financial resources has negated previous reform efforts. Furthermore, the specialized Commercial Court, designed to expedite high-value disputes, remains non-operational. The Fiscal Council warns that unless the justice system is urgently reformed and the Commercial Court begins functioning, this residual private debt will continue to drag down national economic growth.