Cyprus’s financial stability relies on social fund reserves — experts warn

At first glance, the state of Cyprus’s public finances in recent years appears encouraging. Budget surpluses, growth in tax revenues, stable economic dynamics, and actuarial studies calculated up to 2080 create an image of financial stability and manageability.

However, behind these outwardly positive statistics lies a less visible but critically important practice. This concerns the systematic use of social fund reserves to cover the state’s current needs.

Experts point out that this financing model has been applied for many years and allows the state to temporarily maintain budgetary balance. At the same time, questions arise about the long-term risks for the social funds themselves and their ability to meet their obligations in the future.

According to analysts, without a clear strategy to protect and independently manage these reserves, the financial sustainability of the social security system could be at risk, despite favorable macroeconomic indicators.