Government prepares energy relief measures as crisis reaches households

The energy crisis triggered by the war in the Middle East has now reached the doorstep of every Cypriot household. Like other European governments, Cyprus is one step away from rolling out measures aimed at tackling soaring energy costs and the wider cost-of-living squeeze.

While the government is still keeping its cards close to its chest regarding the measures it has already examined and costed, the tools at its disposal are not new. In fact, they were tested just two years ago during another war, Russia’s invasion of Ukraine, which triggered a similar chain reaction across energy markets.

Familiar measures back on the table

According to information obtained by Kathimerini from both the Finance Ministry and the Presidential Palace, the first phase of intervention is expected to mirror past policies. Authorities are reportedly considering tiered subsidies on electricity bills, while a reduction in fuel excise taxes is once again under review.

These are ready-made solutions that have already been applied in Cyprus with European Commission approval, a key prerequisite for implementation by EU member states.

Statements made by officials at the Eurogroup meeting in Brussels during the first half of March also point in this direction. Officials stressed that governments already possess a “toolbox” of measures developed after 2022 to address energy inflation following the Russia-Ukraine war.

As officials told reporters in Brussels, including Kathimerini, these policies are not applied uniformly across the EU. Instead, each member state designs measures tailored to its own economic realities, applying them on an ad hoc basis according to national needs.

Cyprus’ “toolbox”

Cyprus’ so-called “toolbox,” as described in Brussels, includes measures that proved effective during the previous energy crisis. These include:

• tiered subsidies to offset rising electricity costs,
• reductions in fuel excise duties,
• a zero VAT rate on basic essential goods,
• expanded benefits and one-off financial support for vulnerable citizens, and
• medium-term policies aimed at finding permanent solutions to lower energy costs and improve housing affordability.

Which of these measures the government will ultimately activate remains unclear. However, the first two, electricity subsidies and fuel tax reductions, are expected to be announced in the coming days.

Finance Minister Makis Keravnos, meanwhile, made clear in an interview with CyBC that he does not support price caps, warning that such policies could prove risky.

What appears certain is that most measures will be targeted rather than broad-based, with the exception of fuel tax reductions, which apply across the board. That particular policy has repeatedly drawn criticism in recent years for potentially sustaining inflationary pressures.

Greece moves ahead with support package

Greece has already moved forward. Prime Minister Kyriakos Mitsotakis announced a €300 million support package that includes a subsidy of 16 cents per liter on diesel fuel through distribution networks, a digital fuel card to assist consumers, support for farmers, and special compensation for ferry operators.

Following the Commission’s guidance

The European Commission has made clear that member-state interventions should focus on those genuinely in need, avoiding sweeping measures that cover entire economies.

This direction was first issued in late 2022, when the energy crisis dominated Europe’s economic agenda. At the time, eurozone countries were urged to avoid large increases in public spending and instead prioritize targeted support.

At the same time, any assistance measures were expected to be temporary, make efficient use of available resources, and focus specifically on households and businesses most affected by rising energy costs.

Does the government have the fiscal “firepower”?

Preliminary fiscal data prepared by Cyprus’ Statistical Service for January 2026 show a general government surplus of €538.8 million, equivalent to 1.5% of GDP, compared with a surplus of €569.3 million (1.6% of GDP) recorded in January 2025.

Total revenues in January 2026 rose by €14.7 million, or 1%, reaching €1.55 billion compared with €1.54 billion during the same period last year.

Total expenditure, however, increased by €45.2 million, or 4.7%, amounting to €1.01 billion compared with €967.5 million in January 2025.