General Secretary of AKEL letter on the Party’s targeted initiatives to provide support to households and the economy

 

14 May 2022, AKEL C.C. Press Office, Nicosia

In a letter yesterday, the General Secretary of the Central Committee of AKEL, Stefanos Stefanou, informed affected agencies/parties about the targeted initiatives undertaken by AKEL to support the economy and households, as well as to deal with the consequences of the increase in prices of raw materials, essential goods and services.

The framework of AKEL’s actions includes:

• The undertaking of legislative initiatives such as the proposals to reduce VAT on electricity from 19% to 9%, to amplify the reasons for issuing a cap on fuel products and to end double taxation on fuel.
• The comprehensive memorandum of proposals presented to the Deputy Minister of Tourism to address the impact on tourism and the tourism industry.
• The proposal to the President of the Republic and the Minister of Energy for the conduct of lowest price tendering for renewable energy projects.
• The targeted proposals to the government to support critical industries and sectors of the economy.

AKEL insists on the adoption of substantive measures to curb the increases in the cost of energy, fuel and other basic goods on the one hand, and on the other hand to support consumer’s already limited available income, which is currently being eroded due to price pressure.

The following Letter has been sent to the Pancyprian union of small shopkeepers (POVEK), the Cyprus Consumers Association, the Pancyprian Union of Consumers and Quality of Life Association, the Cyprus Chamber of Shipping, the Cyprus Federation of Employers and Industrialists, the Cyprus Chamber of Commerce and Industry and the Cyprus Hotel Association.

The main part of the letter follows:

“Following the meetings we held with various agencies and organisations during which we discussed the economy and more specifically the problems caused in our country by the increase in prices of raw materials, basic goods and services, we would like to inform you of the initiatives we as AKEL have undertaken.

First of all, we note that the price increase predates the war in Ukraine. The sanctions imposed on Russia as a result of its invasion have exacerbated the stalemate on energy issues, the crisis in the supply and food chain and the impact of the fall in consumer spending on tourism and trade.

In view of this situation, the state’s contribution towards tackling – as far as possible – price hikes and inflation is imperative. The delays in the implementation of a comprehensive energy strategy, the continuous breakdowns with regards the arrival of natural gas for power generation purposes, the low share of renewable energy sources in the energy balance and the closure of the Cyprus Grains Commission are all factors that have limited the potential of the Cyprus economy to address these phenomena.

It is our basic assessment that without substantive measures, the already limited available income of consumers will not be able in a position to secure essential goods, while the decline in consumption will have a negative impact on the overall production trend in the Cyprus economy. The fall in consumption has a knock-on effect on workers and businesses that have to cope with the reduction in turnover and the serious increase in operating costs.

In this critical phase that Cyprus is going through, we as a Party have taken numerous initiatives and submitted proposals as part of our efforts to support the economy and households. We note that from the very first moment, in a letter to the President of the Republic, we called for a meeting of the Council of Political Leaders should be convened to discuss and assess the consequences and problems caused by the war in Ukraine and the sanctions that have been imposed. We believe that we must work to address their problems in a collective way. Despite the President’s assurances, unfortunately the meeting did not take place. Nevertheless, we went ahead and undertook initiatives to address the shortages and energy poverty.

We placed particular emphasis on trying to contain increases in the cost of energy, fuel and other essential commodities by taking the following actions:

1) We submitted to Parliament a Bill Proposal for the reduction of VAT on electricity from 19% to 9%. The proposal was approved by a large parliamentary majority, but its implementation is pending after the President of the Republic referred it to the Supreme Court. We note that we have made a commitment that the VAT reduction will apply as long as the current conditions prevail.

2) We have tabled a Bill Proposal to broaden the reasons for issuing a cap on fuel so that it is not limited just to ascertain profiteering, but should take into account more reasons, and especially those included in the legislation on caps on the prices of essential goods.

3) We submitted a Bill Proposal to end the double taxation of fuel so that VAT is not imposed on the excise duty on petroleum products.

4) In a meeting with the President of the Republic and the Minister of Energy, we requested that the government proceed with lowest price tendering for renewable energy projects and storage systems. Such a development will lead to a reduction in electricity prices per kilowatt hour.

5) We submitted a comprehensive memorandum of proposals to the Deputy Minister of Tourism to address the impact on tourism and the tourism industry.

6) We called for continued targeted support from the state for the industries and sectors of the economy affected by the sanctions imposed.

7) We asked the government to appeal to the EU for a demonstration of practical solidarity with Cyprus and for targeted sanctions so that the economies of the member states and the EU itself are protected.

We are of the view that all of the above can represent decisions and actions that contribute significantly to absorbing the shocks that inflationary pressures and price hikes/increases are bringing to the Cyprus economy and households.

We are at your disposal to continue the dialogue in order to help our country and people”.