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Cyprus bank eases loan restrictions

THE Central Bank of Cyprus has eased the loan restrictions for the purchase or construction of second properties from 60% to 70%.

According to a local newspaper report, the Governor of the Central Bank, Athanasios Orphanides, informed the banks on Tuesday that the Central Bank examined the market data and decided to review the lending ceiling.

According to another report in the same newspaper, the government plans to introduce measures to offset EU taxes it has to impose in line with EU Directives in the second half of 2008. Finance Minister Charilaos Stavrakis said that Value Added Tax (VAT) imposed on land sales and tax increases in fuel prices will be returned to the tax payer through targeted counter measures.

Speaking before the Communications House Committee, Stavrakis said that:

  • VAT on land sales will be countered through the return of transfer fees.
  • Road tax fees will be reduced to help the tax payer meet increasing oil prices.

Referring to the situation of the Cypriot economy, Stavrakis said that state revenue is gradually decelerating.

He said that there is a commitment to the EU for a surplus of 0.5% for this year and of 0.7% for 2009, noting that each year there is an increase of fixed expenditure.

Stavrakis noted that public finances will be decelerated due to the cost of transferring water to Cyprus – at an estimated cost of € 4 million – which will not be paid by consumers.

He also said that state revenue from VAT and income tax will fall due to the oil crisis.

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