Cyprus government prepares new measures to tackle cost of living

The Cypriot government is finalizing a new package of relief measures to address the rising cost of living, which will be presented at the next cabinet meeting this Wednesday. Finance Minister Makis Keravnos confirmed that while the primary goal is targeted support for vulnerable groups and low-income households, the government may also implement horizontal measures if necessary to address systemic economic pressures, including high fuel prices and inflation. This decision follows recent discussions between President Nikos Christodoulides and trade union representatives regarding wage and cost-of-living concerns.

The administration notes that it is continuously monitoring geopolitical developments, particularly their impact on the local economy. Current relief efforts already in effect include a zero VAT rate on essential goods such as fresh produce, meat, and hygiene products, a reduced 5% VAT on electricity for approximately 33,000 households, an 8.33 cent-per-liter reduction in fuel consumption tax, and increased child benefits. While the government defends its social policy as a regional model, opposition groups like the Ecologists' Movement have criticized existing measures as insufficient, arguing that recent tax reforms disproportionately favor high earners and large corporations while failing to curb the impact of rising energy costs.