The value of the Social Insurance Fund (SIF) investments in government deposits and securities rose to €11.9 billion in 2024, representing a 12.2% increase compared to €10.6 billion the previous year, according to the Public Debt Management Office’s annual report.
The report reveals that the investment policy for workers’ pension funds has remained unchanged despite assurances from the Ministry of Labour that changes would be implemented.
Trade unions and the Fiscal Council have repeatedly highlighted at parliamentary discussions the need for the government to gradually repay its “debt” to the SIF to establish genuine reserves for the fund.
“The SIF, due to its historical annual surpluses, maintains a large stock of investments in central government,” the report states, clarifying that these deposits are essentially notional and constitute a government obligation to the fund without being counted towards public debt.
The report indicates that the SIF, in an effort to increase its revenue, had previously invested in both foreign and domestic government bonds. However, the total investment in public securities was reduced to zero following the maturity of a domestic bond in June 2021.
The SIF also maintains deposits in domestic financial institutions, which totalled €109 million at the end of 2024.
In addition to the SIF, five other government-managed funds make intra-governmental investments.
These funds had combined investments of €123 million at the end of 2024, with €62 million from the Turkish Cypriot Properties Fund, €57 million from the Government Workers’ Provident Fund, and €4 million from the Hunting Fund.
The Public Debt Management Office explains that the intra-governmental relationship between the government, the SIF, and other managed funds represents “merely a statistical and accounting methodology” when viewed on a consolidated basis.
The report also notes that the Cyprus Republic’s general government consists of three sub-sectors: central government, local authorities, and the SIF.
Local authority loans were calculated at €448 million at the end of 2024, primarily consisting of loans to sewerage boards and local authorities in the form of long-term bank loans with either floating or fixed interest rates.
