Philenews

Fiscal Council: Reasons for the Debt Problem of the Social Insurance Fund

Published January 13, 2026, 08:24
Fiscal Council: Reasons for the Debt Problem of the Social Insurance Fund

The President of the Fiscal Council, Michalis Persianis, analyzed the reasons for the increase in the debt of the Social Insurance Fund (SIF). Although the practice of the Ministry of Finance taking money from the SIF has been common since the fund's establishment, the problem identified by the Fiscal Council is fiscal in nature, not internal to the Fund. The debt increase is approximately €1 billion per year, and maintaining the sustainability of the SIF requires a specific return from its surpluses. Persianis emphasized that the problem lies in the quality of expenditure, as the Government is funded by pensions, with no incentive for fiscal discipline. Furthermore, the money is not invested but spent on non-productive activities. Persianis stressed the need for organic linkage of foreign investments with the Cypriot economy and society, so that the benefits remain in Cyprus and the risk of capital outflow is reduced. It was found that growth and exports are driven by foreign high-tech companies, while wage growth relative to GDP is low and unequal.