MPs demand action on rising prices, interest rates

Lawmakers on Tuesday again harangued the government over its apparent apathy relating to rising interest rates, with one MP calling on President Nikos Christodoulides himself to come to parliament to explain his administration’s policy.

The discussion at the House commerce committee took place in the wake of the European Central Bank hiking its key interest rate to a record high of 4 per cent earlier this month.

Opposition MPs say rising interest rates will wreak havoc on those paying instalments on their mortgage, and could lead to a new surge in non-performing loans. Meanwhile the cost of living in general continues to rise.

They demanded that both the government and the banks take action now “before it’s too late.”

The finance ministry’s permanent secretary Giorgos Panteli said only that the government is monitoring the situation and would make “announcements” of measures when it deemed necessary.

But he reiterated that the government has no say on the monetary policy being set at EU level. And responding to suggestions that the government should subsidise mortgage installments, he said that would clash with EU rules governing state aid.

Panteli recalled that since the start of the Covid pandemic the government has given subsidies to households and businesses amounting to €330 million. Other relief measures include a zero VAT rate on some consumer products, and the agreement to reinstate payment of the Cost of Living Allowance (CoLA).

But MPs were not impressed. Disy MP Kyriacos Hadjiyiannis said the government appears to have no plan on how to tackle the rising cost of living. As for CoLA, he remarked that 70 per cent of the working population are not eligible for it anyway.

“The government has adopted the posture of a mere observer. There is no clear political direction, plan or timetable.”

And he called on the president personally to appear before a session of the House plenum and speak on the subject – given that the government ministers have offered nothing of substance.

For his part, Disy’s Averof Neophytou noted that whereas a great deal of rhetoric is coming out of both the government and the political parties, it does not address real needs.

Compared to last year, he said, inflation on essential items has soared to 30 per cent. Unless “serious measures” are taken now, a crisis will be inevitable.

“We’ve yet to see the worst of it. It is during the first half of 2025 that people will be brought to their knees,” he remarked ominously.

Akel MP Costas Costa likened the interest rate hikes to “the last straw” for struggling households. He warned of a coming increase in non-performing loans, and that people would lose their homes as a result.

Costa also asked the government whether it in fact intends to bring legislation for a windfall gains tax on banks and credit-acquiring companies.

Director of the Association for the Protection of Bank Borrowers Jenny Papacharalambous appealed to banks to take “drastic steps” to provide some relief to vulnerable groups and the middle class alike.

“In the end,” she predicted, “even the middle class won’t be able to keep up with their instalments.”