In 2019, Cyprus remained the country with the highest stock of non-performing loans (assets) of general government, at 28.8% of GDP, a far larger share compared with the other EU Member States, despite a year-on-year decrease of more than 3 percentage points, according to data released today by Eurostat, the statistical service of the EU.
According to Eurostat, this was due to a large transaction in 2018, whereby non-performing loans from a Cypriot public financial corporation (classified outside government) were transferred to a government unit.
Three other EU Member States recorded a share higher than 1% of GDP are Slovenia (2.5%), Portugal (1.4%) and Croatia (1.2%).
For Cyprus, Slovenia and Portugal, the majority of non-performing loans refer to loans of public financial defeasance structures. In the case of Croatia, the figure mainly refers to the loans of a national development bank (also classified inside general government). Data on non-performing loans are not yet available for France.
Meanwhile, in 2019, the highest rates of government guarantees in the EU were recorded in Finland
The most common form of contingent liabilities in the EU Member States is government guarantees on liabilities and occasionally on assets of third parties.
The highest rate of government guarantees was recorded in Finland (33.4% of GDP), ahead of Denmark (18.2%), Austria (16.1%), Germany (13.2%) and France (11.6%).
Data in Finland include as well guarantees provided by a specialised financial public corporation classified outside of government. The lowest shares (close to 0%) were observed in Ireland and Slovakia. Rates of less than 1% of GDP were also recorded in Bulgaria, Czechia and Lithuania. Cyprus was at 7.44% and Greece at 4.09%.
In most EU Member States, the central government is the predominant guarantor. A high level of local government guarantees can also be seen in Finland, Denmark, France and Sweden.
In several countries – Belgium, Spain, France, Cyprus, Luxembourg, Portugal and Finland – a major part of the guarantees is towards financial institutions, often granted in the context of the 2008-2009 financial crisis.
In all EU Member States, liabilities related to off-balance public-private partnerships (PPPs, long-term construction contracts where assets are recorded outside government accounts) were below 2.5% of GDP in 2019.
Slovakia had the highest share (2.4% of GDP), followed by Portugal (2.3%) and Hungary (1.1%). In both Slovakia and Portugal, the liabilities relate mainly to motorway projects.
In many EU Member States, off-balance PPPs were observed at the central government level, whereas in Spain, Belgium and Austria they were notably related also to state and local governments.
The level of liabilities of public corporations classified outside general government in 2019 differs widely in the EU Member States.
Significant amounts of liabilities were recorded in Greece (124.3% of GDP), ahead of the Netherlands (96.8%), Germany (91.7%), Luxembourg (75.1%) and France (58.7%).
In contrast, small amounts of public corporation liabilities were recorded in Slovakia (4.7%) followed by Romania (5.9%), Croatia (8.4%), Lithuania (8.9%) and Czechia (9.8%).
The main reason for the high level of these liabilities in certain Member States is that the data include government controlled financial institutions, in particular public banks. Most of these liabilities consist of deposits held in the public banks by households or by other kinds of private or public entities.