A stark warning has been issued to Cypriot authorities by a delegation of international creditors regarding the country’s demographic challenges. Actuaries from the European Union have raised concerns that declining birth rates pose a growing threat, not just to Cyprus but to multiple nations struggling with low fertility rates.

During a post-memorandum assessment of Cyprus’s economy, public finances, and banking system, the visiting technocrats highlighted that the demographic crisis is emerging as a major national issue.

Armed with data from recent years, they posed critical questions to the Ministries of Finance and Labor, seeking clarifications on the government’s strategies to curb the crisis and prevent further deterioration.

According to sources from Brief, in a recent meeting with Cypriot officials, the creditors’ delegation expressed serious concerns about the demographic issue’s impact on pension funds, the General Healthcare System (GeSY), and public finances in general.

They stressed the urgent need for a national strategy, emphasizing that measures to combat low birth rates must be intensified. Without immediate intervention, they warned, economic growth could suffer significantly.

The discussion also acknowledged that declining birth rates are not unique to Cyprus. Experts highlighted that this phenomenon is spreading across Europe, exacerbating financial and social challenges.

Actuarial studies presented during the meetings revealed a troubling trend: birth rates in Cyprus are plummeting, and the population is aging rapidly. While a birth rate of 2.1 children per couple is required to maintain population stability, current figures show only 1.3 births per couple. This shift has led to an increase in the retiree population while the number of young people continues to decline.

Experts predict that, in the near future, Cyprus could face a scenario where two working individuals will be required to support a single retiree—a burden that could strain the country’s social security and healthcare systems.

Officials familiar with the matter warned Brief that if the demographic issue is not tackled immediately, the government will be forced to raise social insurance contributions for both the Social Insurance Fund (TKA) and GeSY.

This concern was echoed by the international creditors’ technocrats, who reiterated that failure to act swiftly would necessitate unpopular fiscal adjustments in the future.

Social partners, including trade unions and business groups, have also raised alarms about the adverse effects of the demographic crisis.

There is broad consensus that tackling this issue requires incentives for young couples, with a particular focus on affordable housing solutions.

Trade unions, in particular, consider the demographic crisis a "multi-dimensional threat to the country’s social fabric." They advocate for integrating the issue into discussions on pension system reform, warning that the shrinking workforce could destabilize the labor market.

Projections indicate that the average European life expectancy is increasing by two years per decade. If this trend continues, within 20 years, those over 65 will comprise 32% of the European Union’s total population.

In response, President Nikos Christodoulides recently announced a series of incentives aimed at supporting young couples. These include five new housing programs, a €1,500 tax deduction for housing costs, and tax incentives to encourage higher female participation in the workforce.

While these measures mark a step forward, experts argue that a more comprehensive and long-term strategy is necessary to prevent the demographic crisis from spiraling into an economic and social catastrophe.