Nicosia offers a € 103 million support package

The Government of Cyprus announced on Friday a new package of financial support measures for vulnerable groups, with a scale of € 103 million, to offset the effects of inflation and war in Ukraine. A € 192 million support package, following another package aimed at countering the consequences of the pandemic, was approved by the Council of Ministers on Friday.

By the end of August, government spokesman Malios Pelecanos will spend about € 300 million to deal with inflationary pressures and high prices, which is 1.5% of Cyprus’ gross domestic product. increase.

Support measures are related to the extension of value-added tax (VAT) on electricity prices and the upper limit of fuel prices. The government will also raise pensions to mitigate the effects of runaway prices, which have pushed inflation to its highest rate in more than 40 years.

The package will display the VAT for electricity charges charged with a low factor of 10% from the standard 19% to August 31st. Vulnerable groups of people are subject to a low VAT rate of 5% on electricity prices. Until the same day, there is an upper limit on the fuel tax for pumps. These measures are an extension of the policy adopted three months ago.

Treasury Minister Constantinos Petrides said the state would increase the pensions of about 165,000 beneficiaries and provide vulnerable households with a one-time cash distribution based on income and the number of dependents. Low-income families are paid a small lump sum of € 60 to € 150 per child under the age of 18 based on their annual income.

Following the pandemic economic shock, Petrides said Cyprus has plunged into a long-term rise in inflation, primarily due to external factors such as the war in Ukraine.

“The government cannot radically kill inflation, as increased market liquidity can create inflationary pressure and lead to a virtuous cycle of rising prices,” he said.

“With this in mind, the government has introduced 11 steps to ease inflationary pressures on low-income households,” said the Minister of Finance.

Inflation on the eastern Mediterranean islands was 8.6% year-on-year in April, the highest since 1981’s annual record of 10.8%.

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