Nicosia, Cyprus. Outgoing Cyprus Fiscal Council president Michalis Persianis said on Wednesday that Cyprus’ positive economic trajectory must be backed by deliberate policy to preserve its core strengths. He said the economy remains resilient, but medium-term risks are emerging that could develop into a crisis in the near future.
Annual report warning
Speaking during the presentation of the Fiscal Council’s annual report for 2025, Persianis said the economy continues the momentum of the past two years, with healthy figures and resilient growth.
He said economic growth remains lower than in previous years, but added that “the engine of the economy still has steam” despite mainly external pressures.
Labour market and inflation
According to Persianis, employment remains at full capacity and inflation continues to stay within expectations, despite forecast upward pressures in 2026.
Public finances and emerging costs
The council said public finances remain on a successful path, marked by increased revenue, debt reduction, continued surpluses and comfortable liquidity.
It also reiterated earlier warnings that costly needs are emerging in areas including climate, defence, energy infrastructure, natural disasters, housing and transport.
Structural sustainability concerns
The council pointed to a major concern over the long-term sustainability of a structure that finances recurring, permanent expenditures through non-recurring revenues.
It said careful management of foreign direct investment, the spread of benefits such as wage and technological improvements, and the retention of those investments in Cyprus remain crucial, particularly if external pull factors emerge.
Planning challenge
The council said financing these needs while exhausting development expenditure will be a significant planning challenge.
Persianis said, “The design and implementation of plans and strategies over a medium and long-term horizon remains a timeless weakness of the Republic of Cyprus.”
