It was no surprise that in his televised address, President Nikos Christodoulides highlighted the healthy economic indicators which his government’s “responsible economic policy” had achieved. The government, he said had “strengthened the development course of the economy, achieving one of the highest rates of growth in the eurozone, a growth of 3.4 per cent in 2024.”

He also referred to the reduction of the public debt, “which is approaching the target of 60 per cent of GDP” while the unemployment rate was 4.9 per cent. the lowest it had been since 2008. This was the reason international ratings agencies upgraded their credit ratings on Cyprus to ‘A’ grade, said Christodoulides. These positives, which are indisputable, were cited by the president in defence of some of the government’s spending decisions which were not the most prudent.

As regards wages, he said: “we boosted the adequacy of wages, with the average wage increasing by 13.2 per cent and social insurance pension recording a six per cent increase, the highest since 1996.” What he did not mention was that this increase was fuelled mainly by the government’s generosity to public sector workers, who enjoyed big pay rises thanks to CoLA, thus raising the average wage. That this generosity, combined with the hiring of more staff, has led to a public payroll cost of €4.3bn in 2025 was not mentioned by the president, as it was not an example of the government’s “responsible economic policy.”

Like all his predecessors, Christodoulides embraces the theory that the test of good government is how much it spends and he used Wednesday night’s address to boast about the government’s expenditure. Big spending is considered a vote-winner. More than €760m was spent on measures for helping households and businesses deal with high prices while €100m was spent on meeting the demographic challenge he said. And he was not stopping there.

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It was as part of this theory, the president announced a cut of VAT on household electricity bills from 19 per cent to nine percent for one year, starting from April. The government had been under pressure from the parties to address what Akel describes as ‘energy poverty’ and has done so by reducing VAT. It is a political gimmick aimed at silencing critics, who have been demanding government action on the high prices, and it appears to have worked as opposition parties welcomed the announcement.

It is also a crowd-pleasing measure aimed at halting the continuous slide in the president’s approval rating. According to the latest poll, carried out for Sigma TV, 75 per cent of respondents were not satisfied with the work of the president and 65 per cent said he should not be re-elected. Will a reduction of VAT on electricity bills that would save a household with a bill of about €200 – about €15 a month – make a real difference to its standard of living?

It will not. Nor will it boost the president’s popularity, but it would undermine the presidential assertion about the “responsible economic policy” of the government. It is neither responsible nor prudent to tamper with the tax rates, for petty political gain. It is also unnecessary, considering the high rate of growth, conditions of full employment and substantial increase of the average wage.