The government’s economic team is putting the final touches to a support package aimed at easing the impact of high fuel prices.
From the first day the Middle East crisis erupted, the finance ministry has been closely monitoring the situation and drawing up different scenarios to deal with the fallout from the oil price rally, with crude trading at around $100 a barrel in recent weeks.
Although inflation remains at relatively low levels, the state is trying to get ahead of the impact as fuel prices rise.
According to information obtained by Phileleftheros, the ministry has prepared a package of measures that will be finalised in the coming hours.
The measures could be brought before Thursday’s cabinet meeting so they can be approved and sent to parliament as soon as possible.
The measures will be announced by President Nikos Christodoulides himself in a televised address.
During a recent National Council meeting, Christodoulides told party leaders that three bills linked to consumer relief measures would be sent to parliament.
He said the measures would be targeted and would move in the direction of those adopted in 2023 to tackle the energy crisis caused by the war in Ukraine.
He is also said to have told party leaders that if the war in the Middle East continues, the situation will become difficult.
There are estimates that if hostilities continue at the same pace, the price of oil could jump to $250 a barrel.
One of the measures under consideration is the return of the reduced excise duty on fuel.
During the Ukraine crisis, the measures then in force cut fuel prices by 8.32 cents a litre.
Alongside that measure, additional support is also being examined for vulnerable groups to ease the higher cost of energy.
Measures to support businesses hit by the war are also on the table.
These would follow the model used during the coronavirus pandemic, when the state topped up workers’ pay so businesses could stay open.
That measure could be applied to businesses in the tourism sector.
Labour Minister Marinos Mousiouttas said yesterday that the government and the labour ministry were studying the current situation facing the tourism industry because of the war in the Middle East, so that once the existing data had been assessed, there could be an appropriate response.
Another scenario being examined is an increase in the number of instalments under the scheme for settling overdue contributions to the Social Insurance Fund, from the 48 provided for in the bill to 54.
That request was submitted by parties yesterday during discussion of the bill at the House labour committee.
Another measure to be taken is an expansion of the list of products subject to zero VAT.
The Consumer Protection Service, using data from e-kalathi, has already found price increases in some products.
In some product categories, prices have risen by more than 10%.
Rises have been recorded in categories such as dairy products, frozen pastries and pies, chocolates and biscuits.
Until the end of the year, zero VAT will continue to apply to baby and family care products, including infant milk in liquid and powdered form, baby nappies, adult nappies and women’s hygiene products such as tampons, sanitary towels and incontinence pads.
The zero VAT rate also applies to a wide range of fresh or simply chilled vegetables.
As for electricity prices, the subsidy for vulnerable groups will continue until the end of the year.
DISY and DIKO have called on the government to take measures to support households.
DISY MP Onoufrios Koullas said an emergency support plan for households and the economy was needed without delay to keep economic activity steady and avoid heavier losses later on.
He said responsibility and prudence were needed from everyone so that the economy would not be further disrupted by irresponsible and populist behaviour.
DIKO leader Nicholas Papadopoulos also presented 20 measures to tackle high prices and reduce the cost of living.
He said the package was aimed at protecting citizens’ purchasing power, strengthening transparency and competition in the market, and creating conditions for sustainable growth with a social dimension.
The proposals include a price cap on food, an automatic cut in VAT on electricity during periods of crisis, higher renewable energy output, targeted fuel subsidies and a substantial subsidy programme for electric cars.