The Minister of Finance, Makis Keravnos. Speaking on the program “Alpha News,” he defended the government’s interventions and revealed that Cyprus has requested greater fiscal flexibility from the European Union.
Makis Keravnos described the energy crisis as protracted, noting that Cyprus’s dependence on imported fossil fuels is driving price increases across the entire economy. “Given the positive economic indicators—which are also confirmed by the International Monetary Fund— we have requested greater flexibility to create even more fiscal space, so that we can further support citizens, workers, households, and businesses,” he said. He explained that the goal is both to boost disposable income and to finance energy infrastructure, arguing that the relevant expenditures should also be supported by the European budget.
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Read more: IMF forecasts for the Cypriot economy: What are the projections for growth and inflation, and what does Keravnos say?
Regarding fuel prices, the Minister clarified that the government has asked the European Union for the option to further reduce the excise tax on heating oil, below 2.1 cents per liter, with the aim of even temporarily reducing it to zero.
Conversely, he ruled out a selective reduction in the VAT rate on fuel from 19% to 15%, explaining that such a deviation from the standard rate for a specific product category is not permitted. At the same time, he defended the effectiveness of the existing measures, noting that Cyprus ranks, according to the data he cited, among the five cheapest countries in the EU for gasoline and among the nine cheapest for diesel fuel.
For the vulnerable
He made special mention of the one-time financial assistance of €200, which benefits approximately 53,500 eligible individuals and families. According to the Minister, these categories include adults receiving the Minimum Guaranteed Income, people with disabilities who receive a mobility allowance, recipients of the low-pensioner allowance, and families with three or more dependent children who receive a child allowance. When asked about the payment schedule, he referred the matter to the Deputy Ministry of Social Welfare, stating: “The Deputy Ministry of Social Welfare has announced—and I believe this will take effect immediately—that payments will begin on November 1.” The exact date is expected to be clarified by the relevant Deputy Ministry.
Regarding the zero VAT rate on essential goods, Makis Keravnos noted that the relevant measures have been extended and that the government is monitoring developments to decide whether additional measures are needed. He made specific reference to coffee, sugar, baby food, and diapers, while not ruling out new measures for other products should the need arise. At the same time, responding to criticism regarding the effectiveness and targeting of the measures, he stated: “I believe the formula is the mechanism we have in place at the Ministry of Finance, where we monitor market developments, inflation, and product costs, and take timely and proactive measures”.
The model
Finally, referring to social policy and the 2027 state budget, the Minister spoke of additional appropriations of €100 million for housing policy, as well as increased spending to support people with disabilities.
He stated that broader social benefits account for approximately 23% of the budget, while reiterating that the government will continue the economic policy that, in his assessment, keeps growth near 3% and strengthens the country’s investment outlook. At the same time, sending a message ahead of the election campaign, he made it clear that “the ‘there’s plenty of money’ model, ‘Give it all away,’ and ‘we all ate it up together’ is not part of this government’s intentions or economic policy.”
