The impact on the Cypriot economy from the EU sanctions against the Russia after its invasion of Ukraine will mainly stem from tourism and energy, George Panteli, the Finance Ministry’s Permanent Secretary has said.
According to a press release issued by the Finance Ministry, Panteli represented Cyprus in the EU Finance Ministers meeting that wrapped up on Tuesday in Brussels.
EU Finance Ministers discussed the financial and fiscal repercussions of the sanctions the EU has imposed on the Russian Federation.
Speaking at the meeting, Panteli expressed Cyprus’ unwavering solidarity with Ukraine and the Ukrainian people.
With regard to the sanctions imposed against Russia, the Finance Ministry official referred to the broader impact on the EU economy and noted that Cyprus will face challenges mainly stemming from the sectors of tourism and energy.
Russia is considered Cyprus’ second tourism market, while the loss of tourism arrivals both from Ukraine and Russia in 2022 is estimated at 800,000. Furthermore, energy prices will affect inflation in Cyprus, as the island is almost wholly dependent on oil for electricity generation. The Finance Ministry has revised its projection concerning inflation in 2022 to 4% from its previous estimate of 1.5%.
Furthermore, the EU Finance Ministers reached an agreement on the EU Carbon border adjustment mechanism on the basis of the proposal by the European Commission and had an orientation discussion on the transposition to EU law of the OECB global agreement on a 15% tax rate to large multinational corporations.
ON March 14, Panteli also attended the Euro area Finance Ministers’ meeting (Eurogroup) which discussed the financial situation and the coordination of fiscal policy in the Euro area in the light of the war in Ukraine, as well as the Banking Union and the enhanced surveillance report on Greece.