‘Cyprus’ economy is doing better than most of EU’

Finance Minister Makis Keravnos said on Friday that Cyprus’ economy is “operating at a better level than most countries in the European Union”.

Speaking to CyBC radio, he disputed claims that the country has not seen economic development since the current government.

“They said there is no economic development, but is it possible to give out what we have given out, nearly €300 million in economic measures in the last year, if we didn’t have economic development?

“To be given credit from those incredibly strict EU institutions – would that be possible without economic development? Our economy is performing better than most countries in the European Union at this point.”

He also defended the government’s decision not to extend the fuel subsidy past its expiry date on Monday, saying he had been warned against it by the EU and other international organisations.

He said the government had been given “strict warnings” by the European Commission against implementing and extending across-the-board economic measures, with targeted measures for vulnerable sections of society now favoured.

As well as this, he said, ahead of a planned meeting with representatives of the International Monetary Fund regarding their evaluation of Cyprus’ economy, he has been told “the only thing they find is those across-the-board measures, and they tell us we have to stop them.”

He was then asked why, in that case, he had taken the decision to extend seeming across-the-board measures with regard to the electricity bill subsidy and the zeroed VAT rate on basic products.

However, he disputed the characterisation of such measures as “across the board”.

“It is wrong to interpret the zeroed VAT and the electricity bill subsidy in this way. In fact, these are very targeted measures,” he said.

“The electricity bill subsidy operates on a sliding scale, with the level of subsidies offered depending on usage. This therefore is a targeted measure as it helps vulnerable people more,” he added.

On the matter of the zeroed VAT rate, he said “this policy is about 11 very specific everyday products. We haven’t abolished VAT across the board, we have just zeroed VAT on these very specific items to help people get by.”

He then moved on to speak about Cyprus’ middle class, saying “this government recognises what the middle class have gone through in the last few years because of economic crises and the crisis of the Covid-19 pandemic, among other things.

“Our aim is not to make more people live off handouts, but to restore the middle class.”

This is the reason, he said, why targeted measures have been introduced, with the hope that those measures will allow people to improve their own financial situations and grow the economy, rather than becoming reliant on government funding to make ends meet.