Social spending may be increasing, but the money does not always seem to reach where it is most needed. This is one of the most resounding conclusions of the 2026 Interim Report of the Fiscal Council, which puts under the microscope not only the amount of social benefits, but above all the way in which they are distributed.
The Report itself bluntly indicates that "the problem is not the level but the targeting of social spending".
The total social benefits of the state budget amounted to €2.021 billion in 2025, with €901 million. to concern health and €803 million. social welfare. Despite the increase, however, the Fiscal Council finds that benefits that operate purely redistributively, i.e. those that essentially reduce inequalities and support the vulnerable more, are declining as a percentage of GDP.
The finding acquires even greater weight if seen next to the 2027 Budget. At the level of the General Government, i.e. the entire public sector, social benefits in cash are budgeted at €4.895 billion, while social transfers in kind, such as health services and other benefits that are not given directly in money, amount to another €1.291 billion. In total, the two categories exceed €6.18 billion. in 2027.
In the state Budget itself, social benefits reach €2.337 billion, from €2.266 billion. in 2026, recording an increase of 3.1%. Of these, €1.066 billion. concern health benefits, €820 million. social welfare and almost €99 million. housing benefits.
65+ in the red
And yet, the picture of poverty among the elderly is moving in the opposite direction. The Fiscal Council examines whether social benefits actually reduce inequalities and support vulnerable groups. As recorded in the Report, the redistributive effect is 81% based on pensions, while the risk of poverty for those over 65 increased from 21.7% to 33.2% within three years.
"The deterioration of conditions is not uniform, but is strongly concentrated in the older population," the Fiscal Council notes. At the same time, the corresponding index for the total population remained close to 15%, while for children under 18 years of age it decreased from 16.3% to 12.7%.
Roof... elusive for young people
The pressures, however, do not stop at the elderly. The Exhibition also targets younger people, especially those in the lower income strata. The Fiscal Council warns that "pressures on housing affordability are intensifying, particularly for younger and lower-income households", calling for closer monitoring of the housing market.
The Fiscal also links the pressures to the rise in house prices. As it records, the house price index increased by 3.4% year-on-year in the first quarter of 2026, while it refers to the Central Bank of Cyprus, which attributes the continued rise, among other things, to "strong demand for housing mainly from foreign buyers".
At the same time, the 2027 Budget provides for €98.9 million. for housing benefits, compared to €101.1 million. in 2026, i.e. a decrease of approximately €2.2 million. or 2.2%.
