Act II · The stateStory 12 of 31
Two pots, not one
In 2025 the Cyprus state ran a surplus of €1.24 billion. On paper, all of it sits in the pension and health funds. Almost all of it is money the general budget paid or credited to them.
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"The state has a surplus" is true, and it hides the most useful fact about that surplus. The state does not keep its money in one pot. It keeps it in two, and money moves between them.
Yearly balance of each part of the state, € million. Bars above the line are surpluses, bars below it are deficits; the dot is the total.
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Eurostat gov_10a_main, net lending or borrowing by subsector. Central government is the state budget and other central bodies. The funds are the Social Insurance Fund and the GESY fund together; their balance includes what the central government pays into them.
What the numbers say
The first pot is the general budget. Income tax, VAT, company tax and duties all flow into it, and it pays for schools, police, defence, roads, salaries and most benefits. In 2025 the central government took in €11.65 billion and spent €11.67 billion. It ended the year €17 million short.
The second pot is the funds: the Social Insurance Fund, which pays pensions and benefits, and the GESY fund, which pays for health care. In 2025 they took in €5.48 billion and paid out €4.23 billion. They ended the year €1.25 billion ahead.
Add the two together, with a small surplus from the local authorities, and you get the €1.24 billion that made the headlines.
But the funds are not filled by workers and employers alone. Of the €5.48 billion they received, €4.32 billion is recorded as contributions. That figure includes the state's own contribution to the Social Insurance Fund, which the fund's accounts put at €689 million. Another €856 million was paid in by the state, most of it its contribution to GESY. And €305 million was interest, on Eurostat's figures for both funds together, most of it paid by the state on reserves it has borrowed from the Social Insurance Fund.
Take out the state's money, and little is left. Workers, employers and the self-employed paid in about €3.63 billion, the state among them as the employer of its own staff. The funds paid out about €3.64 billion to pensioners, patients and health providers outside the state, and a further €590 million to other parts of the state, most of it, as far as we can tell, GESY's payments to the state hospitals. So what workers and employers pay in is no more than what the funds pay out. The surplus of €1.25 billion is, on balance, what the general budget put into the funds: its contributions to both and the interest it owes, less what the funds paid back to it.
Seen the other way round, the general budget was not really €17 million short. Before what it put into the funds it was about €1.2 billion ahead. Much of that was never paid in cash: the state credits its contribution to the Social Insurance Fund to an account it holds itself.
This is not a one-year pattern. Since 2019 the funds have been in surplus every year, and the central budget has been in deficit in five of those seven.
What it means for you
The surplus in the funds is not spare money. Today's workers and employers pay in no more than today's pensioners and patients take out. The surplus is the state setting aside its own share, largely on paper, against the pensions those workers are building up. The fund will have to pay them later.
Nor is the reserve sitting in a vault. The Labour Minister said in September 2026 that the state has borrowed about €12 billion from the Social Insurance Fund. The debt figures fit that: on Eurostat's figures the central government's own debt is €33 billion, while the state as a whole owes €20 billion to everyone else. The difference is what one part of the state owes another.
So when you hear that the state can afford something "because of the surplus", it is worth asking which pot is meant, and whether the money has already been promised.
What people argue
Should the surplus be spent? One side says that with prices rising, a state that takes in over a billion more than it spends should give some of it back, through relief on fuel, food and electricity. The other side says the surplus should keep reducing the debt, which is what has brought down the interest bill.
Which side convinces you?
Should the surplus be spent?
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The numbers add a point that both sides tend to skip. In the accounts the surplus belongs to the funds, not to the budget that pays for relief measures. And it is the general budget's own money, set aside to meet obligations to future pensioners.
Is the pension fund safe? Its yearly surplus is large, which is reassuring. But if the reserve is largely a loan to the government, as the minister's figure implies, the fund is only as good as the government's ability to repay it. That is one reason a low public debt matters to pensioners, and it is part of the argument over the pension reform put out for consultation in September 2026.
How we know
The figures are Eurostat's accounts for each part of general government: central government, local government and the social security funds. The 2025 figures are the first estimate and will be revised.
The split of the funds' surplus is our own arithmetic on those accounts. Contributions were recorded at €4,318 million. The funds spent €4,228 million, of which €590 million was paid back to other parts of the state, leaving about €3,640 million paid out to people and health providers. The state paid in €856 million and the funds earned €305 million in interest.
The statistics count the state's contribution to the Social Insurance Fund among employers' contributions. That is our reading: the fund's own accounts show a state contribution of €689 million in 2025, the statistical line for transfers from the state matches the state's contribution to GESY and leaves no room for it, and the contributions of workers and employers in the two funds' own accounts fall short of the recorded total by more than that, about €950 million in 2024; the rest fits the smaller funds for redundancy, holidays and insolvency. We took the €689 million out of contributions and counted it as the state's money. The Treasury describes this contribution as not an actual cash outflow.
The statistics count the Social Insurance Fund and the GESY fund together, so we cannot show how much of the surplus belongs to each. The figure for the state's borrowing from the fund is the minister's, as reported in the press. The Public Debt Management Office puts the fund's deposits with the state at €11.3 billion at the end of 2025, and at €13.2 billion with the smaller social insurance accounts; Who holds the debt has the detail.
Corrected on 3 October 2026. An earlier version said that nearly half of the surplus was the general budget's money. It had counted the state's contribution to the Social Insurance Fund as if workers and employers had paid it.