On the instructions of the President of the Republic, following the meeting held on 20/05/2022, meetings were held under the chairmanship of the Minister of Finance with the Ministers and Deputy Ministers concerned in order to finalise the additional measures to address inflationary pressures and inflation.
Following an assessment of the contributions submitted, the Council of Ministers approved the adoption of additional one-off targeted measures amounting to €103 million to alleviate mainly, but not only, the most vulnerable groups of the population. This package follows on from the measures already taken by the Government at the onset of inflationary pressures, amounting to more than €193 million.
Consequently, the total amount that will have been spent by 31 August 2022 to address inflationary pressures and price pressures amounts to almost €300 million, An amount equivalent to 1.5% of the GDP of the Republic of Cyprus
It is noted that these measures are fully in line with the guidelines of the European Commission and in accordance with the fiscal capacity of the state, so that fiscal stability is not put at risk.
Below is a detailed breakdown of the new package of 14 measures with a total cost of €103 million
A. SUPPORT FOR PENSIONERS
1. Adjustment of pensions to take account of inflation
From 1 July it is estimated that the pensions of 165,200 beneficiaries will increase by around 4.3% (the final rate will be determined depending on the level of inflation for the months of May and June 2022).
It should be noted that from 1/1/2022 an increase of 1.22% has already been granted to pensions and other benefits, based on the increase in average insurable earnings in 2021 compared to those in 2020, as provided for in the legislation.
Consequently, the increase which will be granted from 1 July 2022 will be the second for this year.
B. SUPPORT FOR WELFARE PERSONNEL GROUPS
2. Grant of a one-off grant to support vulnerable population groups (covering the period until 31/08/2022)
In detail:
Category 1: (Beneficiaries 6.639 households)
All family units, which are recipients of child benefit and have an annual gross income of the previous year of up to €10,000, will be paid a one-off amount of €150 for each child up to the age of 18
Category 2: (Beneficiaries 13.008 households)
All family units, which are recipients of child benefit and have an annual gross income in the previous year of between €10,001 and €19,500, will receive a lump sum of €120 for each child up to the age of 18
Category 3: (Beneficiaries 1.804 households out of 14,604 that fall into this category of income criteria)
To all family units, which are recipients of child benefit and have an annual gross income in the previous year of €19.501 to €29,000, with 3 or more children, will be paid a lump sum of €100 for the third or additional children up to 18 years of age
Category 4: (Beneficiaries 1,587 households from 13.323 who fall into this income criteria category)
To all family units, which are recipients of child benefit and have annual gross incomes in the previous year of, €29.001 to €39,000, with 3 or more children, will be paid a lump sum of €80 for the third or additional children up to 18 years of age
Category 5: (Beneficiaries 1,037 households from 8.866 falling into this income criteria category)
To all family units, which are recipients of child benefit and have an annual gross income in the previous year of €39.001 to €49,000, with 3 or more children, will be paid a one-off amount of €60 for the third or additional children up to the age of 18
A total of 24,075 families with a total number of 45,883 children will benefit from the above measures.
Category 6: (Beneficiaries
23.087 including spouses and dependent children older than 18 and up to 28 years of age)
To all family units, not falling into the above categories, who are beneficiaries of the Minimum Guaranteed Income or Public Assistance and have no dependent children under 18 years of age)
To all family units, not falling into the above categories, who are beneficiaries of the Minimum Guaranteed Income or Public Assistance and have no dependent children under 18 years of age, will be paid a lump sum of €100 for the beneficiary, €50 for the beneficiary's spouse, and €25 for each child of the beneficiary belonging to the family unit
This measure is expected to benefit 18,454 beneficiaries, 2,401 dependants of beneficiaries and 2,232 spouses of applicants.
Category 7: (Beneficiaries 4.750 persons with disabilities who receive benefits from the Department for the Integration of Persons with Disabilities)
All persons with disabilities who do not fall into the above categories and who are beneficiaries of benefits from the Department for the Social Integration of Persons with Disabilities (blind, quadriplegic, paraplegic, severely physically handicapped, beneficiaries of mobility allowance) will be paid a lump sum of €100.
4,750 disabled persons are expected to benefit from this measure.
In total, 73,720 persons will benefit from a one-off grant.
It should be noted that the lump sum allowance will not be taken into account in the calculation of total income for the purpose of determining the entitlement or income category to which each beneficiary falls in the scheme he/she is already participating in.
3. Immediate announcement (effective September 2022) of a Child Care Services Subsidy Plan for children up to age 4 for subsidizing tuition and feeding fees in day care centers
16.000 potential beneficiaries, with the monthly allowance amounting to 80% of the tuition and feeding fees, with a subsidy of between €100 and €350 per month for each child, based on criteria that take into account, among others, the number of children.
Further details will be announced by the Ministry of Labour and Social Insurance and the State Ministry of Social Welfare.
C. ELECTRIC ENERGY
4. Extension of horizontal and targeted measures to reduce VAT on electricity until 31 August 2022.
That is, reducing VAT from 19% to 9% for residential consumers and from 19% to 5% for vulnerable consumers
5. Increase in the subsidy for beneficiaries of the Installation of Photovoltaic Systems and Roof Insulation Scheme
- For Vulnerable Consumers: from €750 to €1,000 per installed kw, and
- For residential consumers: from €250 to €375 per installed kw.
6. Expand the list of vulnerable energy consumers to include an additional 19,500 family units with annual gross incomes of up to €19,500 to benefit from increased subsidies under the Renewable Energy and Savings and Upgrade Grant Schemes of the Ministry of Energy, Trade and Industry.
Further details will be announced by the Department of Energy, Trade and Industry.
7. Increase from 90% to 100% of the possibility of covering the annual electricity consumption of the building for own consumption from the electricity produced by the photovoltaic system for residential consumers and businesses.
Therefore, residential consumers and businesses will be able to cover all their electricity needs through the installation of photovoltaic systems which makes the investment more attractive since the payback period and electricity costs are reduced.
8. Acceleration and simplification of the licensing procedures for the installation of RES systems so that the building permit for the installation of a RES system is considered to be granted in cases where a planning permit already exists.
D. FUELS
9. Extension of the excise duty reduction measure for motor fuel and heating oil until 31 August 2022
E. SUPPORT MEASURES FOR THE AGRICULTURAL AND ANIMAL PRODUCTION SECTOR
10. Support for recognised Producer Groups and Organisations in crop production amounting to €700,000 to cover part of their operating costs
11. Additional support to livestock and agriculture sectors of €8.8 million to cover part of the price increases due to inflationary pressures
This is new support, in addition to the amount of €8 million approved on 13 April 2022 by the Council of Ministers.
F. ADDITIONAL MEASURES/Initiatives
12. The Council of Ministers decided to intensify inspections to combat obscenity. In the event that any instances of obscenity are observed, the Government will proceed with the imposition of a cap.
13. The Cabinet welcomes why the intention of the RAEC to issue a decision to set a cap on the purchase price of RES at 11s/kwh as compared to 19s/kwh which is the current price is moving in the same direction. This decision will apply to RES projects included in the Plan with a final destination in the competitive electricity market.
14. The Council of Ministers urges the House of Representatives to proceed with the immediate passage of the bill that has been pending before it for a long time in order to implement the Government's decision to reduce the Renewable Energy Fund consumption charge to 0.1 c/kWh from 0.5 c/kWh currently.
(PM/NG/SX)
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