A delegation from the International Monetary Fund (IMF) on Friday held informal discussions with members of the House Finance Committee during their technical assistance mission to Cyprus.

The visit was arranged following a request from the Finance Ministry with the ultimate objective of streamlining the state salary structure.

According to parliamentary sources cited by the Cyprus News Agency (CNA), IMF technocrats have prepared a study and submitted it to the Finance Ministry for review.

The key finding highlighted by the IMF experts, the agency explained, is the necessity to reduce the level of state salaries.

They noted that Cyprus ranks above the average compared to other EU countries, as well as developing and developed nations, in terms of state salary levels.

In addition, they also pointed out significant disparities between public and private sector remunerations.

Proposed measures by the IMF technocrats include cuts, the abolition of the automatic Cost of Living Allowance (CoLA), and the provision of salary increments every two years instead of annually.

However, they also acknowledged the political challenges associated with implementing such drastic measures.

Finance Minister Makis Keravnos had previously announced during his 2024 budget speech that the ministry would seek IMF technical assistance for rationalising the state salary structure.

Moreover, this initiative aligns with the priorities set forth by President Nikos Christodoulides for 2024.

It should be noted that the IMF delegation has been in Cyprus since June 18 and concludes its visit on July 1.

In its latest report on Cyprus, the IMF highlighted that the state salary structure and public sector employment are “significantly high” compared to other EU member states.

Additionally, the increase in CoLA strengthens the link between public sector wages and inflation.

Finally, the IMF emphasised that wage adjustments should be based on macroeconomic developments and productivity.