Fiscal Council Chief Warns Of Hidden Risks Amid Sustained Economic Growth

by THEFUTURE.TEAM

November 10, 2025

Cyprus is currently experiencing a period of robust economic expansion and fiscal balance. Fiscal Council President Michalis Persianis highlighted in the 2024 activity report that the nation is poised to maintain growth around 3 percent, driven by widespread sectoral contributions. State revenues are climbing steadily, even outperforming forecasts adjusted for inflation and general expansion.

Emerging Risks In A Period Of Prosperity

Despite these favorable conditions, Persianis warned that apparent stability could be masking significant long-term risks. He noted that while employment indicators remain strong, a further drop in unemployment could serve as an early warning signal rather than a celebratory milestone. The sustained zero inflation during this high-growth phase exemplifies both the nation’s resilience and the subtle challenges that accompany prosperous times.

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Preparing Fiscal Space And Strategic Flexibility

Central to the Fiscal Council’s mandate is managing the nation’s debt trajectory, which remains on a downward path with a target of falling below 60 percent of GDP by 2025. According to Persianis, one of the Council’s key objectives is to preserve sufficient fiscal space. This flexibility is essential for governments to implement decisive measures when economic conditions require fiscal intervention. He emphasized that the current inflexibility in state expenditures—particularly indiscriminate social spending—limits available policy options and can entrench pro-cyclical dynamics.

Infrastructure, Climate, And Strategic Institutional Upgrades

Persianis underscored the urgent need to address structural weaknesses in vital infrastructures such as water supply, public transport, and energy. Challenges posed by climate change, which has transitioned from a theoretical scenario to a tangible reality, demand significant investment and forward-thinking strategies. His analysis also pointed to external uncertainties—from geopolitical turmoil to rapid technological advancements—that could reshape fiscal dynamics in coming years.

Long-Term Vision And Institutional Readiness

The Fiscal Council’s report calls for proactive, medium- to long-term strategies to safeguard Cyprus from future crises. While current surpluses offer a window of opportunity, Persianis reminded decision makers that easy times can mask the risks of complacency. He stressed the importance of enhanced analytical capacity and strategic planning within the Council to provide decisive guidance as external pressures intensify.

Upcoming Initiatives And Regional Cooperation

Looking forward, the Fiscal Council is organizing a thematic conference under the auspices of the European Network of Independent Fiscal Institutions (EU NIFI) in early 2026. This event, set against the backdrop of Cyprus’s forthcoming Presidency of the European Commission, underscores the critical role of institutional collaboration for broader fiscal reform and policy coordination across the European Union.

In summary, while Cyprus currently enjoys impressive economic health, the Fiscal Council’s leadership warns that significant challenges lie ahead. The nation’s ability to maintain fiscal discipline and implement strategic reforms will be pivotal in navigating the evolving global and domestic landscapes.

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Cyprus Renewable Energy Sector Under Scrutiny: President Demands Swift Transformation

by THEFUTURE.TEAM

November 19, 2025

Cyprus is under increasing pressure to expedite progress in developing its renewable energy sector, a sentiment expressed forcefully by President Nikos Christodoulides at the 13th Energy Symposium in Nicosia. In his address, the president outlined an ambitious energy strategy concentrating on renewable sources, gas exploration, and enhanced regional interconnectivity, while openly criticizing the sluggish pace of renewable initiatives—a fault he deemed entirely within Cyprus’ control.

Renewable Energy And Gas Exploration

Emphasizing the conference theme, ‘Time For Action In Energy,’ President Christodoulides stressed that global expectations have shifted from rhetoric to the execution of tangible projects. Notably, he recalled that although Cyprus made its first gas discovery in 2011, the exploitation of these deposits within its Exclusive Economic Zone has yet to commence, even as 2025 advances.

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Renewables In The Spotlight

While the president discussed the potential of gas extraction and regional electricity interconnections, his most scathing remarks focused on the renewable energy shortfall. Despite Cyprus enjoying an average of 350 sunny days per year, the current integration of renewable sources into its energy mix stands at a modest 23 percent. In stark contrast to northern European nations, which have achieved higher renewable penetration even with less sunlight, this disparity is a source of national disappointment.

Government Initiatives And Reform

Highlighting progress under his administration, Christodoulides cited significant developments in photovoltaic adoption—8,500 applications submitted and upgrades completed for 4,000 homes to date. He also underlined future green tax incentives and a crucial overhaul of the transmission system to bolster energy storage and grid stability. The president argued that modern energy storage is essential not only for maximizing renewable output but also for reducing costs and supporting a more resilient grid.

Market Liberalization And Consumer Benefits

In a concurrent reform, Cyprus recently launched its competitive electricity market on October 2. This move is expected to allow consumers to select suppliers in a more transparent, flexible, and cost-effective manner. By integrating conventional generation with renewable production, the reform is poised to offer significant benefits to households and businesses alike.

Strategic Regional Interconnections

Addressing the highly debated issue of regional interconnection, the president confirmed ongoing discussions with neighboring states regarding electrical grid integration. He endorsed the €1.9 billion Great Sea Interconnector project (GSI), connecting the electricity grids of Cyprus, Greece, and Israel. Upgrades to both the economic and technical parameters of the project were recently agreed upon in Athens.

Forming Strategic Alliances

President Christodoulides also highlighted the newly established 3+1 energy cooperation framework between Cyprus, Israel, Greece, and the United States as a strategic initiative. This alliance is aimed at fortifying energy security by diversifying the region’s energy sources and diminishing dependence on less reliable actors. Meetings, including one in Athens and upcoming sessions in Washington, DC, are set to further align the interests of Eastern Mediterranean nations with those of global energy powerhouses.

Overcoming Challenges And Future Outlook

Despite occasional controversies surrounding the GSI project—such as financial commitment concerns by Greek officials and alleged conflicts of interest as noted in previous reports—ongoing dialogue among key ministers, including Energy Ministers George Papanastasiou and Stavros Papastavrou along with European Energy Commissioner Dan Jorgensen, has helped defuse tensions. Looking ahead, the interconnector is seen as a cornerstone of the broader India-Middle East-Europe Corridor (IMEC) initiative, reinforcing Cyprus’ strategic importance in the regional energy landscape.

Looking Beyond

In a final note at the symposium, President Christodoulides announced plans for an upcoming trip to Lebanon on November 26 to engage in further strategic energy discussions. This international outreach underscores Cyprus’ commitment to not only resolving its current challenges but also positioning itself as a dynamic alternative energy corridor to Europe.

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