Finance Minister Keravos speaks on electricity subsidy reinstatement

Finance Minister Makis Keravnos said the government is “not dogmatic” on Friday after reinstating the electricity subsidy on Thursday.

Speaking to reporters following a meeting with European Court of Auditors Member Lefteris Christoforou, Keravnos rejected claims he had “backed down” regarding the subsidy’s reinstatement, and the introduction of 16 other measures – worth €196 million – as part of a wider package to help people through the cost-of-living crisis.

“When we were talking about targeted measures, because this was the direction the European Commission is taking, I indicated there may be a more generalised measure to be implemented,” he said.

He added, “therefore, the measures we implemented were a mixture of targeted and more general measures, and at the same time, some of our general measures have a significant degree of targeting.”

Among those general measures with in-built targeting, he said, was the electricity subsidy.

“There is a tiered subsidy according to consumption, which promotes energy saving. Homeowners with large houses with swimming pools will not be subsidised,” he said, adding that the most vulnerable in society would see 100 per cent of rate increases subsidised by the government.

Speaking regarding the government’s balance of payments in relation to the measures, he said he had “always explained the need to maintain a fiscal surplus”.

“We create surpluses to be the safety valve if there is a crisis … and to be able to make in-depth social policy to an extent that society’s needs are dealt with as much as possible without ever jeopardising public finances,” he said.

He added that the other reason behind his motivation to keep the government running a budget surplus was to be able to react to and shield the country’s economy from international crises.

He said, “we feel these crises now in our neighbourhood,” referring to the ongoing situation in Israel and Gaza and added that his ministry is also “monitoring developments” in relation to the war in Ukraine.

To this end, he said weight is being placed on the possibility of oil exports from Israel being banned, with Cyprus in regular receipt of Israeli oil.

“Therefore, a potential reduction in supply would raise prices and cause inflation. We must monitor this with the requisite seriousness and responsibility,” he said.

Despite this, he said the conflict in Israel and Gaza had “not been weighed into the risks of implementing the 2024 state budget”.

“However, we acted proactively and responsibly and, as always, we are running a budget surplus precisely to face unforeseen developments such as this which may impact us,” he said.