Cyprus motorists could see continued relief at the pumps as the government prepares to submit a formal proposal to Cabinet to extend the current reduction in motor fuel tax rates, potentially through March 2027. Finance Minister Makis Keravnos confirmed the initiative on Wednesday following a Cabinet meeting, addressing urgent driver concerns as the existing tax relief measure is set to expire at the end of November. At the same time, the government is awaiting a response from the European Commission’s energy and taxation departments regarding its request for a further cut in excise duty on heating oil. Keravnos expressed optimism based on preliminary communications, emphasizing that authorities will continue pushing for policy terms that suit the island's economic conditions.
The Finance Minister is departing on Sunday to attend upcoming Eurogroup and ECOFIN meetings, where Cyprus's fiscal treatment will be discussed further. Keravnos argued that an economy generating fiscal surpluses, steadily reducing public debt, and expanding at around 3 per cent per year should not be constrained by blanket European rules that ignore national performance. While welcoming the recent decision by the European Central Bank under President Christine Lagarde to halt interest rate increases, Keravnos warned that the ongoing global energy crisis continues to inflate transport, operating, and living costs across the economy, with inflation expected to trend upward.
Keravnos also pushed back against suggestions that higher state revenues were merely a byproduct of inflation, pointing to targeted VAT cuts on electricity and essential goods. He explained that rising consumption fueled by disposable income naturally strengthens state coffers without increasing the tax burden on citizens. The resulting fiscal surpluses have provided vital room to cover unexpected emergency spending, including several million euros allocated for foot-and-mouth disease containment and response efforts for the Limassol fires, all while safeguarding the island's investment-grade credit rating.
Responding to concerns over capital development spending, Keravnos clarified that delays stem from project execution time lags rather than changes in government priorities, noting that several complex inherited projects are being systematically addressed. He stressed that the state budget maintains a strong dual focus on economic development and welfare, with 23 per cent of total spending dedicated to social policy, a proportion unprecedented in any previous national budget.