Economy of Northern Cyprus in Debt: What Awaits the Country after October 19

The economic situation in Northern Cyprus is causing serious concern, especially ahead of the presidential elections scheduled for October 19. Experts note that one of the most challenging tasks for the new administration will be addressing budgetary issues and the growth of public debt.

According to the Ministry of Finance, in 2025 the government has already borrowed about 19 billion Turkish lira through the issuance of domestic bonds. From February 11 to August 25, 22 domestic borrowing auctions were conducted. Additionally, the Central Bank provided foreign currency loans totaling about 2.4 billion lira.

Against this backdrop, the debt burden of the population and businesses is rapidly increasing. The total bank credit portfolio reached 164 billion lira, 55% higher than a year ago. Of this, consumer loans amounted to 28 billion lira (+56% year-on-year), and credit card debt reached 8.5 billion lira, showing a 69% increase.

Economists call this a “debt-credit vicious circle.” The high level of borrowing, combined with the scale of the shadow economy, estimated at up to 80%, casts doubt on the possibility of creating a balanced budget in 2026.

Before the elections, the work of parliament and the government is effectively frozen, and all key decisions are postponed. Analysts agree that after October 19, the new administration will need to quickly develop a plan for budget stabilization and debt restructuring, which will require time and broad political support.