Cyprus announced new stimulus package of EUR 251 mln

Additional new measures to boost the economy’s development rate and to maintain unemployment at low levels, amid the continuing global economic crisis, were announced here Tuesday by President of the Republic Demetris Christofias.

Announcing the measures at the end of an extraordinary session of the Council of Ministers, President Christofias said the cost of these measures is estimated at 251 million euro and geared towards tourism and the construction industry.

He said that in tourism, the government has decided to abolish the overnight stay fees which the local authorities take from hotels, to lower the landing fees which airlines pay, to reduce the VAT rate from 8 to 5% in overnight hotel stays and to implement a plan to strengthen local tourism. These measures will cost 51 million euro, the President said.

For the construction industry, President Christofias announced measures totaling 200 million euro which include a new loan plan to couples with low and middle income, the construction of new refugee estates, as well as the construction and repair of school buildings and projects for social care.

At the same time, the government decided to maintain existing deposits in the banking system totaling 700 million euro for a further three and a half months, in an effort to boost the banks’ cash flow and repeated a call to banks to lower their interest rates.

President Christofias told reporters the global economy is facing a very difficult time and forecast for 2009 is grim. “The Cyprus economy is expected to be affected to a relatively smaller extent, especially compared to Eurozone countries”, the President noted.

He said the government has effectively and timely drawn up a new plan to handle the crisis.

Furthermore, Christofias said the new measures took into consideration the suggestions of the political parties, the unions and other organisations as well as the state’s fiscal capabilities.