€12 Billion Debt: State’s Ongoing “Bad Practice” with Social Insurance Fund
Social Insurance Fund Loan Accounts for 94% of Cyprus’s €1.4 Billion Fiscal Surplus in 2024
A loan from the Social Insurance Fund (SIF) accounts for 94% of Cyprus’s €1.4 billion fiscal surplus for 2024, according to estimates by the Fiscal Council. As of December 2023, the government’s total obligation to the Fund stands at €12.03 billion, based on data from the Statistical Service of Cyprus.
As Brief reports, the fiscal surplus reached €1.438 billion, amounting to 4.3% of GDP, while the primary surplus surged to €1.94 billion, or 5.6% of GDP.
A significant increase in state revenue was recorded in 2024, rising by €1 billion, or 7.8%. This revenue growth is primarily attributed to a 10.25% increase in tax revenue (an additional €790 million) and a 28% rise in sales revenue (an additional €239 million).
Despite these gains, the Fiscal Council highlights a reduction in capital and development expenditures by €381 million for the General Government and €450 million for the Central Government.
The decline in development spending stems partly from the postponement of several infrastructure projects, including the Paphos–Polis Chrysochous road, the Liopetri lake development, and the Larnaca Marina project.
As a result, capital expenditures fell by 24.5%, dropping from €1.6 billion in 2023 to €1.2 billion in 2024. Development spending as a share of total expenditures also fell sharply, from 4.4% to just 1.5% for the General Government.
Meanwhile, current expenditures, particularly those related to intermediate consumption, increased by 15.8%. Wage-related spending rose by 7.5%, while social benefits increased by 7.4%.
The Fiscal Council also notes an overall restraint in government spending, with a modest total increase of 1.5% (equivalent to €197 million), as well as a contained increase in interest payments by €25 million.
The Central Government maintained a small surplus of €68 million, demonstrating its ability to operate close to a balanced budget.
According to the Council, the surplus provides significant fiscal space for Cyprus to realign with the new EU economic governance rules, reinforcing the country’s macroeconomic stability.
