Cyprus reforms social insurance fund to end state borrowing

The Cypriot Ministry of Labor has announced a significant reform of the Social Insurance Fund to ensure its long-term viability. A key decision is the permanent termination of the state's practice of borrowing from the fund. The government plans to repay its existing 12 billion euro debt to the fund over a 40-year period, ending by 2066, with annual installments of approximately 0.3% of GDP. Future annual surpluses, estimated at 800 million euros, will be redirected into an independent investment account managed according to European governance standards. Minister of Labor Marinos Mousiouttas stated that these measures aim to build a reserve fund of 50 to 60 billion euros. An independent authority will be established to oversee these investments to ensure transparent and sound management. The government intends to submit the relevant legislative bill to Parliament by early July 2026, with formal discussions beginning in September 2026.