The International Monetary Fund has issued clear warnings and observations about the Cypriot economy following the conclusion of its mission to the island, from late April through early this month. In its statements, the IMF focused on key issues including inflation management, energy prices linked to the war, proposed changes to the foreclosure framework, and reforms in the energy sector, which it described as necessary. The Fund also stressed the need for targeted policies that support long-term growth without creating market distortions. The IMF said any new spending measures or tax cuts should be aimed at strengthening long-term growth.
Priority, it said, should be given to quality public investments in energy, climate adaptation, digital infrastructure and sustainable transport, backed by strong investment management. Measures such as zero or reduced VAT rates, cuts to excise taxes and other price interventions aimed at easing energy inflation were described as costly, lacking unfocused, distorted, and should therefore be withdrawn. The IMF calls for targeted and temporary support measures, along with policies improving energy efficiency and infrastructure.
