The cabinet on Thursday approved a reduction of VAT from 19 per cent to 5 per cent on electricity bills for vulnerable groups for six months.
The decision is in line with European Commission recommendations and will come to force as soon as it is approved by the EU.
Finance Minister Constantinos Petrides said the “government has proven that it was among the first governments that took drastic measures to help our fellow citizens during this wave of inflation wave.”
Electricity bills have also seen a 10 per cent across-the-board reduction for four months.
Petrides said there was also the cost of living allowances, which will cost the state about €70m in salary increases, allowances, and pensions. Around €130m in pay increases will be given in the private sector, he said.
The minister said in proportion to its population, Cyprus was the country with the most drastic fiscal measures especially for vulnerable groups and the population in general, in a bid to overcome any problems created by tehri sing inflation.