Specific measures are needed to combat expensiveness
By AKEL Political Bureau member Eleni Mavrou
Sunday 17 September 2023, “Haravgi” newspaper
The European Central Bank resumed its interest rate hikes a few days ago, the tenth since July 2022, sending the message that they will remain high “for a sufficiently long period of time” – even if all these increases do not seem to tame inflation.
Now interest rates in the Eurozone and by extension in Cyprus have reached an all-time high, which is expected to put even more pressure on borrowers’ resilience (in line with the stagnant incomes of households and many SMEs). Moreover, at a time when the cost of living has also increased significantly.
One would expect the government to react to the barrage of increases with the implementation of specific measures. No!
The Finance Minister forgot that a few months ago he sent letters to the banks “with clear indications” that if there was no response from them he would proceed to take measures. Now he sees “positive moves” (really, which ones?) and refers to their “commitment towards economic growth and social welfare” – even if Cypriot banks record perhaps the largest profit margin in the entire Eurozone in terms of interest rates, something the government insists on ignoring.
As if the apathy and inaction with which the government ruling forces are following the developments were not enough, they are making mocking of us from above. On Wednesday, as announced by the Finance Minister, the Cabinet approved his proposal to reduce the tax on interest by reducing the special levy for defence from 30% to 17%. He even told us that this government decision, which has a fiscal impact of around €16 million, “increases the disposable income of depositors”!
But the problem is not those who have savings in banks. It is the borrowers who calculated things differently a year ago and see things developing differently today. The borrowers who see their payment rising every now and then and are dreading their loan going red.
Unless the Chancellor of the Exchequer thinks that by cutting VAT on coffee and sugar people will have enough left over to pay their repayments!
There are no more excuses for the government. At a time when one after another EU countries are taking measures to support borrowers and promote specific actions to address expensiveness, the N. Christodoulides government engages only in wishful thinking.
What the country needs are measures such as the reintroduction of the subsidy on electricity, the reduction of the tax on fuel and the targeted interest rate subsidy on mortgages. And it needs them now!