Petrides: Government to continue support measures for vulnerable groups

The government is determined to continue the support it has been providing to vulnerable population groups against rising inflationary trends said Finance Minister Constantinos Petrides, speaking on the sidelines of the presentation of the Sponsorship Scheme for Student Dormitories and Rooms in the old city of Nicosia.

According to the Minister, "we are indeed living in an era of inflation, not only in Cyprus but in the entire European Union. The reason is purely exogenous, due to the war in Ukraine and the increase in oil and gas prices, due to the fact that 30% of grain production is going out of the world production because of the situation in Ukraine and Russia, due to the sanctions. It is not something that any country can deal with on its own."

"What we are doing and have done and will continue to do is to try to mitigate the consequences as much as possible, especially for the most vulnerable groups," Petrides said, adding that Cyprus is the only country in the EU that has also taken horizontal measures: "There is no other country that reduced fuel tax horizontally and for everyone, other countries chose to give some benefits only to the vulnerable, we reduced horizontally the VAT on electricity for several months, from 19% to 10%. We further targeted the vulnerable and reduced it from 19% to 5%. Because of the increase in fuel prices we also took other targeted actions, such as a 50% increase for allowances in mountainous areas. We have approved in the last Cabinet meeting alone €8.5 million to help the livestock sector to cope with increases in feed and grain prices, in addition to another €16 million already given."

"We will continue to do this as long as our resources allow, but we will have to preserve some of the state's resources because of this uncertainty," he added.

Commenting on the current inflationary trends, the Minister said that indeed these were not predicted at the global level: "We have used a significant part of the reserves to support society during the pandemic.  One of the reasons consumption is still at quite high levels despite inflation is because of the fact that incomes were supported and increased, even deposits increased during the pandemic, of course at an incredible fiscal cost to the state."

He said that from now on consistency is needed. "We will monitor the situation, times are difficult. I make no secret of the fact that the prosperity in Europe in recent years has been due to a very large extent to the relatively low fuel prices".

"These things are changing, it will not be without cost. I am not and will never be a populist, there will be a cost because of the situation that is taking shape. I hope inflationary trends will subside, but we have to know that we still have the cheapest fuel prices in the EU at the moment," he stressed.

"We will try to focus on the protection of the vulnerable and from there, through growth and investments, we will try to raise incomes. Certainly, the next few years will be quite difficult not only for the Cypriot economy but especially for the European one," he said.

He added that inflation for April closed at 7.1%, which is still lower than other EU countries, a very bad phenomenon as it erodes purchasing power.