Cyprus is embracing structural reforms for economic diversification as recommended by the IMF. The country aims to maintain fiscal discipline, invest in growthsustaining sectors, enhance banking sector resilience, and implement green tax reforms to address aging and climate challenges.
The government is addressing fuel price surges with targeted measures to support the middle class and vulnerable demographics, implementing green taxes to encourage sustainable practices, and reforming pension policies to ensure fiscal responsibility and equity. These strategic approaches aim to balance immediate relief with longterm economic stability. Finance Minister Makis Keravnos emphasized the government’s active role in tackling the issue and acknowledged the broader European context impacting fuel prices, highlighting the need for changes in consumption patterns to ensure economic stability and sustainability.
The IMF has raised concerns about Cyprus’ broad economic support measures, warning against extended zero VAT programs and subsidies for electricity bills, advocating for more precise relief strategies to avoid inflation and strain on public finances. While the government defends its decisions on tax relief measures, the IMF’s recommendations highlight the need for targeted approaches and caution against blanket support measures to ensure the economy’s stability and growth.
