Political parties in Cyprus have welcomed the government’s announced comprehensive €196 million package of measures, including fuel subsidies, to alleviate the financial burdens of the rising cost of living.
But economists are ringing alarm bells over a possible resurgence of the already sky-rocket inflation. And opposition parties are calling for “specification” of some of the measures, Philenews reported on Friday.
The 17-measure package – including the reinstatement of an electricity bill subsidy – was announced on Thursday by President Nikos Christodoulides following a cabinet meeting.
In his address, the President sent the message that he understands the immense pressure that both households and businesses are currently enduring.
Analysts noted that the government sought to prevent new price increases by expanding the list of products that will be subject to zero VAT rate. It has added meat and vegetables – but not dairy products, as was the original intention – after latest data from the Statistical Service showed that these products have recorded serious price increases.
Analysts also described the announced package of measures as strong enough and predict that they will significantly support society from the alarmingly rising prices of the past few months.
However, they suggested that these are partly also inflationary measures.
At the same time, they believe that some measures will contribute to growth, as money will flow into the market and there will be an increase in consumption.
They pointed out that from the 11 direct return measures, amounting to €141 million, the state will also benefit financially, as it will receive tax revenues through the consumption boost.
As regards the fiscal aspect of the measures, the government has managed to broadly stay within its capacity, with a manageable cost of 0.3% of GDP.