Panayiotis Rougalas
Fears of a fragmented Parliament that would struggle to get things done did not materialize, with six parties now set to shape Cyprus’ political and legislative agenda over the next five years.
The 56 members of the new House of Representatives are divided among six political parties, with alliances and power balances already beginning to take shape. Much of the attention is now turning to the economy and the wave of bills and legislative proposals expected to come before Parliament. As recent presidential and parliamentary elections have shown, economic issues remain a key battleground in Cypriot politics.
While the overall economic climate is relatively stable, Parliament, and especially the Finance Committee, has increasingly been dealing with proposals driven by cost-of-living pressures, inflation, wars, and global economic uncertainty.
Under the new political setup, at least in economic matters, two broad approaches are expected to dominate. One is more pro-business and focused on economic stability, while the other leans more towards social protection and public welfare; in simple terms, one prioritizes “markets” and the other “people.”
On one side are the 17 MPs of DISY and the 8 of DIKO. On the other are the 15 MPs of AKEL, the 4 of ALMA, and the 4 of Direct Democracy. The 8 MPs of ELAM are expected to act as a potential balancing force in economic votes, with their position, whether supportive, opposing, or abstaining, likely to determine whether key measures pass or fail.
Given its ideological positioning, ELAM is unlikely to back proposals coming from AKEL, just as AKEL is not expected to support initiatives coming from ELAM. This makes ELAM a possible “kingmaker” in tightly contested economic votes.
A more structured political approach?
With its 8 seats, ELAM now carries significantly more influence in the new Parliament. There are already political whispers that DISY and DIKO may seek to bring the party into more structured dialogue on economic issues. If so, ELAM will likely face greater scrutiny and will be required to clearly define and explain its positions.
In practice, this means the party may need to develop a more coherent and detailed economic policy, as its larger parliamentary presence leaves less room for ad-hoc or symbolic interventions, as may have been the case in the previous House.
First major tests: taxes, housing, pensions
From the very first days of the new Parliament, MPs will be confronted with key economic proposals and major legislation, including the 2027 state budget.
One of the first major tests of political cooperation is expected to be a proposal by AKEL to tax bank profits. The issue has been raised repeatedly in recent years amid rising interest rates and will serve as an early indicator of how parliamentary alliances are forming.
On such a proposal, the arithmetic looks difficult: ELAM is not expected to support AKEL-backed measures, while opposing blocs are unlikely to align. Other issues, such as foreclosure-related legislation, could see more fluid alignments, with smaller parties potentially shifting positions depending on the proposal.
Housing-related legislation, however, is expected to face less ideological division, as the problem of housing affordability is widely recognized across the political spectrum and is also being addressed at the EU level.
Big reforms ahead: pensions and EU funding
The broader EU multiannual financial framework is also expected to shape Cyprus’ reform agenda, effectively functioning as a new recovery and resilience roadmap.
One of the most significant upcoming legislative challenges will be pension reform. According to Labor Minister Marinos Mousiouttas, the bill is expected to reach Parliament in July, pending agreement with social partners. It will then be debated in committee, with the aim of passage in the autumn and implementation by January 2027.
The reform is seen as a key test for the new Parliament, with direct implications for public finances, the social insurance system, and future pension adequacy.
2027 budget expected in a stable political setting
The 2027 state budget is expected to be submitted to Parliament in late September or early October. Unlike past years marked by political uncertainty, the current composition suggests a smoother approval process, particularly after ELAM supported the 2026 budget.
With DISY, DIKO and ELAM likely to form a working majority on fiscal matters, a repeat of the 2021 budget rejection crisis appears unlikely.
Institutions call for stability
The Central Bank of Cyprus congratulated the newly elected MPs, saying it looks forward to constructive cooperation with Parliament and political parties. It stressed the importance of maintaining economic stability and ensuring the country’s continued steady economic path within the framework of Cyprus’ participation in the European System of Central Banks.
