The government is adopting a wait-and-see stance on announcing new support measures to address the impact of the energy shock caused by the war in the Middle East, choosing not to rush either the content or timing of any intervention. The economic team is closely monitoring developments in energy markets, amid high volatility that makes early action potentially ineffective and likely to require further measures later.
Dual message from government
Officials signalled a twofold message. Cyprus currently maintains the lowest prices for liquid fuels in Europe, both before and after taxes, while support measures worth approximately €100 million are already in force. The cautious approach reflects the need to assess developments carefully in an unstable geopolitical environment. Finance Minister Makis Keravnos said the government is closely tracking international energy prices and does not intend to introduce horizontal measures such as fuel price caps. Interventions, he said, will be introduced “when necessary” and will be targeted.
Government spokesperson Konstantinos Letymbiotis confirmed that a list of potential measures has already been prepared and will be announced in due course, depending on the duration and intensity of the regional crisis. He added that any measures will align with European Commission guidelines and will have a defined timeframe.
Existing €100 million support package
Letymbiotis emphasised that the government’s ability to consider additional measures is based on strong fiscal foundations. He pointed to existing measures totalling around €100 million, including a 10% reduction in VAT on electricity, targeted subsidies for vulnerable households and businesses, and reduced or zero VAT on essential goods. These measures, he said, are already acting as a “safety net” for consumers and businesses, limiting the immediate impact of rising energy costs.
Political and institutional input continues
Consultations are ongoing with political parties, which have submitted or are expected to submit additional proposals. These will be evaluated based on fiscal capacity, feasibility and compatibility with the European framework.
DISY called for the development of an emergency economic plan, warning against populist approaches in the run-up to elections and stressing the need to maintain fiscal discipline. At the same time, the president of the Cyprus Scientific and Technical Chamber (ETEK), Konstantinos Konstantis, also called for action, noting that long-term solutions for cheaper electricity would require significant public investment, with costs ultimately borne by consumers and taxpayers. He further urged consideration of a mechanism to adjust carbon costs in the wholesale electricity market, highlighting that for an average Cypriot household such costs reach 19%, compared to an EU average of 11%.
The government’s current stance reflects an effort to balance readiness to act with the need to avoid premature decisions in a highly uncertain environment, as energy prices and geopolitical developments remain fluid.