Interest rate increases are unbearable for society

Statement by AKEL Political Bureau member & Head of Economic Policy Charis Polycarpou

25 November 2022, AKEL C.C. Press Office, Nicosia

If the DISY government had any grasp of the real problems society is facing, it would have already moved heaven and earth to provide support to households and businesses that are being brought to their knees by the ongoing increases in interest rates. The problem is so great that without support measures the pressure on society will be unbearable.

We believe that the State has a responsibility to intervene with specific measures to support borrowers, especially those in greatest need:

First, in cooperation with the Central Bank of Cyprus, the government should ensure that the notorious ‘Restructuring Code’ is implemented to provide temporary relief from the increased instalments. Such solutions include extending the repayment period of the loan, spreading the extra amount of the instalment over the entire loan or even paying off the additional amount at the conclusion of the loan.

Second, the government should first adopt support measures through the Cyprus Asset Management Company Ltd (KEDIPES) – a state agency and ensure that the new rent-in-lieu scheme reflects current realities.

Thirdly, it should be putting pressure on the banks to use the windfall profits they are making from interest rate increases for the benefit of society. We point out that in Spain they are already proceeding to tax the super-profits of the banks.

In Cyprus, however, the government is indifferent to what is happening in the rest of the world. It lives in its own world, backing powerful financial interests and leaving society unprotected.