Cabinet will continue to subsidise electricity bills

Cabinet on Wednesday approved €30 million in the second supplementary state budget for this year to continue the subsidy for the increased electricity prices.

The total amount of the second supplementary budget reaches €345.1 million, corresponding to 0.4 per cent of GDP.

Speaking after the session, Finance Minister Constantinos Petrides said since the pandemic, the government continues to subsidise electricity in different ways.

“Your bills show the reduction which has been subsidised by the state since last month and will continue until the end of the year,” he said.

The government, Petrides added, subsidises VAT and has subsidised most of the 22 per cent increase imposed by the electricity authority in September. This is 100 per cent for the vulnerable groups and for other households is between 50-80 per cent of the additional increase, including for commercial and industrial premises, Petrides said.

He added that other smaller allocations concern €10 million to accommodate Ukrainian refugees, €1 million to accommodate unaccompanied minors who seek asylum, increased sponsorship to universities and sponsorship to the Cyprus land development corporation.

Cabinet also approved a €4.4 million to support farmers, another €3.8 million for the purchase of medicines and vaccines, €3 million for the medical treatment of Cypriots abroad and another €1.4 million allocated for social benefits for people with disabilities among others.

Petrides said there is no change in the forecasts for the fiscal dept or any other macroeconomic indicators “because we had foreseen that, due to the emergency situation, we would earmark this money through supplementary budgets”.

Responding to a question about the heating oil subsidy, the minister said this is also subsidised, as is diesel and gasoline. These, he said, are subsidised through reduced excise duty.

“We are one of the few countries that have reduced excise duty on fuel. For heating oil it is 6.4 cents a litre and for diesel and petrol somewhere around 8.5 cents a litre and will continue until the end of the year.”

The effects of the energy crisis “are not easy”, Petrides said, adding that there will be “consequences”. But, Cyprus is among the countries that took the most measures so far, explaining that the island imports fuel from Greece, where fuel is 30-40 per cent more expensive.

As regards the first supplementary budget for 2022, amounting to €102 million, this concerned mainly measures implemented due to the coronavirus pandemic, support to social groups and the agriculture and health sectors.

Most of it, the minister said, was allocated for the government’s general contribution to the national health scheme, which is increased by €150 million due to the higher projected growth rate from 2.7 per cent in the first half of the year to 6 per cent.

“It is important to understand that a robust economy with high growth rates is very important so that we have a sustainable health system,” he said.

Apart from Gesy, the budget, due to the good performance of the economy is increased by €93.5 million in terms of the government’s contribution to the Social Security Fund.