The worst economic crisis in Turkish Cypriot history

 April 14, 2024

We have lost hope in this country, shopkeepers say

The annual inflation rate in the northern part of Cyprus hit 94.5 per cent in March as Turkish Cypriots continue to experience the worst economic crisis in their history. Inflation compared to February rose by 6.9 per cent – the highest monthly inflation since the crisis began in 2021.

According to the official figures announced by the Statistical Institute, monthly food inflation in March was 3.4 per cent, which brought the food inflation to 220 per cent since 2022. The price of bread has increased by 25 per cent since the start of this year alone.

‘Bairam meal turns sour,’ a front page on daily Halkin Sesi read, reporting about the exorbitant food prices ahead of the Eid festival (Bairam) this week. The festival marks the end of the holy month of Ramadan.

Even though Turkish Cypriots are among the most liberal Muslims globally, the Eid festival is a very important time of the year when families come together for feasts and celebrations.

‘Barbecue remains a dream during Bairam,’ wrote Star Kibris. ‘Baklava is for the price of gold this Bairam,’ headlined Kibris Postasi.

The Turkish Cypriot economy has been in freefall since 2021 as the Turkish lira continuously declined in value against most major global currencies because of the unorthodox interest-rate-cutting policies of Turkish President Recep Tayyip Erdogan. The official currency in the north is the Turkish lira, which lost some 40 per cent of its value in the past year alone. It has shed a further nine per cent this year. Keeping rates artificially low led to skyrocketing inflation, placing Turkey among the top five inflation champions in the world along with Zimbabwe, Sudan, Venezuela and Argentina.

Annual inflation in Turkey in March was 68.50 per cent, while the monthly inflation was 3.16 per cent.

Last month, Turkey’s central bank raised its key interest rate to 50 per cent in an attempt to combat inflation. Policymakers cited a “deterioration in the inflation outlook.” The central bank predicts Turkish inflation will rise towards 80 per cent by the summer.

The north adopts the Turkish key interest rate.

The fall in the value of the Turkish lira affects Turkish Cypriots even more as the economy is almost completely dependent on imports. Even imports from Turkey are indexed to the dollar. Transportation and import costs are also exacerbated by a cumbersome public administration that creates additional expenses. Moreover, many goods, services and expenses such as real estate, cars, rent and school fees are in foreign currencies although people’s salaries are paid in Turkish liras.

The flow of foreign currency into the Turkish Cypriot market through the increasing number of foreigners living there has also worsened inflation as each sector started to determine prices according to the higher purchasing power of foreigners, according to economists. Unlike in a normal economy, where the value of the local currency would increase with foreign currency inflow, the value of the Turkish Lira didn’t increase as it is not determined by the Turkish Cypriot economy.

“The money inflow with uncertain sources plays a big role in the increase [in inflation],” Turkish Cypriot economics professor Engin Kara of Cardiff University wrote on his social media account. “In the near future, a large part of the economy will be comprised of this money.”

Soaring prices in the northern part of the island have left people, especially those on low or fixed incomes, with plummeting purchasing power and a decline in their living standards. The Cyprus Turkish Civil Servants Union (KTAMS) calculated that a family of four earning the minimum wage is living right at the hunger threshold.

According to KTAMS, the hunger threshold – the amount needed to maintain a healthy, balanced and adequate diet – for a family of four as of the end of March, was 23,644 Turkish Lira (about €687). The minimum wage in the north is currently 24,000 Turkish lira (about €697).

As Turkish Cypriots experienced a huge drop in their purchasing power leading to a decline in their living standards, they also saw their debts rocket.

According to the official figures of the Turkish Cypriot central bank, total borrowing from banks increased 61 per cent as of the end of 2023 compared to the previous year to 87 billion Turkish lira (about €2.5 billion). As of 2022, the total borrowing stood at 53.9 billion (about €1.6 billion).

Together with borrowing, the amount of non-performing loans also increased 58.2 per cent by the end of 2023 compared with 2022 to 4,176 million Turkish liras (about €121 million).

The uncontrollable price increases also deeply affect businesses that have to grapple with constant increases in costs. In the last two months alone, bottled gas and electricity prices increased 7.8 per cent, while fuel prices increased 10.8 per cent.

Head of the chamber of shopkeepers and artisans (KTEZO) Mehmet Ali Ardic told daily Yeniduzen last week there is a 70 per cent closing rate in small food and beverage businesses as they cannot keep up with the increasing costs.

“We have lost our hope in this country,” head of the association of restaurant owners Arif Bayraktar said. “We are just rowing the boat in vain. We are not getting anywhere.”

https://cyprus-mail.com/2024/04/14/the-worst-economic-crisis-in-turkish-cypriot-history/

Ever-widening divisions between rich and poor in north

By Esra Aygin

December 3, 2023

Many families are surviving on less than the hunger threshold of €557 a month

The price of bread was recently increased by a further 20 per cent

A growing number of Turkish Cypriots live below the poverty threshold, while the income inequality between the richest and poorest segments of the society reaches unprecedented levels, a recent survey has revealed.

According to the 2021-2022 household budget survey conducted by the statistics institution in the northern part of Cyprus, almost 15 per cent of the population are currently living under the poverty threshold.

For comparison purposes, calculated with the methodology used in the European Union member states, the ratio increases to 22.8 per cent according to economists. This places the north among Romania and Bulgaria – the two EU countries with the largest percentage of people living below the poverty threshold.

The survey also shows that while poverty is growing, the high-income segment of the society is receiving a much larger percentage of the population’s total income. The Gini coefficient, which shows the degree of inequality in the distribution of income, is 0.37. According to economists, a Gini coefficient greater than 0.4 indicates that there is a big income gap in the society, which often leads to social and political instability or tension.

The survey results “show a huge inequality in income distribution, where the Turkish Cypriot middle class is fading into poverty, while the rich are getting richer,” economist Mustafa Besim explains to the Cyprus Mail. “The distortion in the distribution of income in the society has never been this bad.”

Besim highlights that GDP per capita has remained almost the same in the last 15 years – around 14,000 dollars – while the equality in distribution of income has deteriorated. The Gini coefficient in the previous survey conducted in 2015 was 0.33.

Hunger threshold

Making the situation grimmer, a calculation by the Cyprus Turkish Civil Servants Union KTAMS has revealed that a family of four earning the minimum wage is not only poor, but is in fact living below the hunger threshold.

According to KTAMS’ calculations, the hunger threshold – the amount needed to maintain a healthy, balanced and adequate diet – for a family of four as of October was 17,074 Turkish lira (about €557). The minimum wage is 15,750 Turkish lira (about €501).

“Those earning the minimum wage are left to starve,” Ktams head Guven Bengihan stated when announcing the findings. “People with minimum wage do not have the money they need to get enough food for their families.”

“I earn the minimum wage and have three children, who go to school,” Hamit Manga told the daily Yeniduzen a few weeks ago in a street interview. “I can only make ends meet because I do an extra job… I am worried about the future of my children. It looks like the only thing I will leave them will be debt.”

“It’s impossible to save money. We are only saving the day,” stated Mustafa Altinkalb in the same interview. “Many people are selling whatever they have just to survive. The rich have become richer, and the poor have hit rock bottom.”

“There is no middle class anymore,” said Mehmet Kadiri. “The rich lead super lives and the poor are struggling at the bottom… We are like a hopeless patient living on life support.”

Inflation

One of the main reasons that distorted the distribution of income to this extent is inflation, according to economist Besim. Turkish Cypriots have been going through one of the worst economic crises in their history since 2021 as the Turkish lira continuously declined in value against most major global currencies. Just this year, the Turkish lira lost 40 per cent of its value. This has led to soaring prices in the northern part of Cyprus, where the economy is dependent on imports.

According to the Statistical Institute, the annual inflation was 78.6 per cent in October. The monthly inflation was 1.9 per cent, while the monthly food inflation was recorded as 3.3 per cent. Earlier this week, the price of bread increased a further 20 per cent.

Although the official currency in the north is the Turkish lira and people’s salaries are also paid in lira, many expenses like rent and school fees are in foreign currencies, which exacerbates the situation. As Turkish Cypriots, especially those on low or fixed incomes, have experienced a huge drop in their purchasing power leading to a decline in their living standards, they have also seen their debts cascade as most borrowing in the north is done in foreign currencies.

Construction boom

Tens of thousands of houses are being built and sold mostly to foreigners in places like Trikomo

However, parallel to the increase in poverty and the income inequality, there is a huge amount of cash flow into some sectors such as construction and real-estate in recent years.

Ten of thousands of houses are being built and sold mostly to foreigners – mainly Russians and Iranians – in areas like Kyrenia and Iskele/Trikomo. Lack of reliable statistics and the overall problem of the unregistered economy makes it impossible to calculate exactly how big the construction and real estate sector is, but economist Merkan Hamit roughly estimates, looking at the construction projects and the prices, that property sales generate an annual 1 billion dollars in the north. This is almost one thirds of the gross domestic product.

It is estimated that the unregistered economy amounts to 80 per cent of the total economic activity.

According to the Chamber of Shopkeepers and Artisans (Ktezo), while small businesses, particularly in the food and beverage sector, are steadily going out of business, brokers, consultants and real estate agents, primarily run by foreign citizens, are taking their place. Data from Ktezo show that half of the small food and beverage businesses opened in recent years have closed down, while almost one third of new workplaces that have opened so far this year are linked to the real estate sector.

“There is a lot of economic activity in certain sectors, but due to a lack of effective public policies from adequate regulations, to controls and taxation policies, the revenue that is generated is not distributed equally to the society,” says Besim. “While certain segments of the society are getting ridiculously rich, others are not able to benefit from this economic activity… There is a very rich group on the one side, and then a very poor group on the other.”

The income inequality and the ensuing shrinking middle class has serious social implications, according to Besim.

“As the middle class becomes poorer, it starts spending its income solely on the basics such as food, health and shelter,” he explains. “The smaller the middle class, the smaller segment of the population spends on education, arts, culture. This completely distorts the social structure of the society as a strong middle class is required for a strong democracy. The lack of a strong middle class means those in power aren’t questioned or criticised. It is easier to govern societies with such a big income inequality. Unfortunately, this is where we are headed.”

https://cyprus-mail.com/2023/12/03/ever-widening-divisions-between-rich-and-poor-in-north/

Greek Cypriots keeping north afloat

‘The only reason there is some life in the market is because of the money flowing from the south’

By Esra Aygin

As Turkish Cypriots go through one of the worst economic crises in their history, Greek Cypriot spending in the northern part of Cyprus has proven to be a significant contribution to the ailing sectors from hospitality to retail.

For some businesses such as restaurants, the income from Greek Cypriots has meant that they could stay afloat.

“In the past year, it has been the Greek Cypriots, who have made it possible for the food sector to survive,” says head of the Turkish Cypriot Restaurant Owners Association, Salih Kayım. “Turkish Cypriots cannot not afford to go to restaurants anymore.”

The Turkish Cypriot economy has been in free-fall in recent years, as the Turkish lira lost 44 per cent of its value in 2021 and shed a further 22 per cent this year. Its fall in value has led to soaring prices where the economy is dependent on imports. The annual inflation rate reached 120.32 per cent in September. Although the official currency in the north is the Turkish lira and people’s salaries are also paid in lira, many expenses like rent and school fees are in foreign currencies, which exacerbates the situation.

As Turkish Cypriots experienced a huge drop in their purchasing power leading to a decline in their living standards, the devaluation of the Turkish lira made the north very attractive for Greek Cypriots, whose official currency is the euro. They started forming huge lines at the crossing points to come to the north for petrol, pharmaceuticals, clothes and even hairdressers and dentists.

This prompted opposition Republican Turkish Party CTP head Tufan Erhürman to say last week, that “we have come to a point where the Turkish Cypriots are watching while the [Greek Cypriots] are shopping.”

For the first time since the crossing points opened in 2003, there now are more Greek Cypriot crossings than Turkish Cypriot crossings. Between January and August this year, 1,883,000 crossings to the north were recorded by Greek Cypriots. During the same period, Greek Cypriots spent almost 30 million euros just with their credit cards. This figure doesn’t include cash spendings.

This is why the Turkish Cypriot Chamber of Commerce, Turkish Cypriot Chamber of Industry, the Turkish Cypriot Travel Agencies Association, the Turkish Cypriot Chamber of Shopkeepers and Artisans, Turkish Cypriot Restaurant Owners Association, and Turkish Cypriot Hoteliers Association are calling on the Turkish Cypriot administration to ease the crossings and open more crossing points.

“The only reason there is some life out there on the market is because of the money flowing from the south,” chairman Ali Ardıç of the board of the Chamber of Shopkeepers and Artisans says. “If this stops, businesses would go bankrupt. We have to understand this… The faster the crossings are, the better for us… This should be a priority because many sectors are kept alive only because of the crossings.”

The south’s contribution to the north’s crisis-ridden economy is not limited to Greek Cypriot spendings, economist Merkan Hamit explains.

Trade across the Green Line, whereby Turkish Cypriots sell certain goods to the Greek Cypriots, has generated a revenue of 8 million euros so far this year, according to Hamit. Boosted by the devaluation of the Turkish lira, sales through Green Line trade are expected to double compared with last year and reach 12 million euros by the end of this year.

This will be the highest in 18 years, according to İzzet Adiloğlu, the deputy secretary-general of the Turkish Cypriot Chamber of Commerce.

Another way the south is contributing to the north’s economy is through the Turkish Cypriots, who are working on the southern part of the island and living in the north. Although their official number is around three thousand, the real number is believed to be around six thousand. Assuming they earn the minimum wage, this constitutes a contribution of 50 million euros to the Turkish Cypriot economy, says economist Hamit. “This is the invisible services export between the north and the south.”

The Greek Cypriot spendings in the north, the sales to the Greek Cypriots through Green Line trade and the money earned by the Turkish Cypriots working in the south, all together constitute a revenue of an annual 200 million euros for the north, according to Hamit. This is 12 per cent of the Turkish Cypriot GDP, which is a significant amount, he says.

At least half of this cash flow from Greek Cypriots to Turkish Cypriots is through petrol stations.

“All this economic contribution is despite the fact that we keep Greek Cypriots waiting at the crossing points for hours, despite the daily insults by Turkish Cypriot authorities against Greek Cypriots, despite the negative attitude the Greek Cypriot authorities have regarding the crossings, and the Green Line trade,” Hamit says.

For comparison, as of the end of September, the total amount of money as part of the Turkish aid transferred to Turkish Cypriots was around 63.8 million euros. Out of this, 38.9 million euros were allocated to defence expenses. From the remaining amount, 21 million euros were allocated to investment projects including the controversial “Külliye” project and the upgrading of the Ercan/Tymbou airport. Less than 4 million euros were allocated to investments for the real economic sectors.

Economist Hamit draws attention to a “lack of vision” when it comes to the failure of Turkish Cypriot authorities to bank on this potential and develop policies to maximise the economic integration of the northern and southern parts of the island.

“The dominant actors in the Turkish Cypriot political life base their arguments on good relations with Turkey,” says Hamit. “Despite the fact that the money coming from there is peanuts if you take out the defence expenses, they will not do anything to damage the relations because that is how they win elections… For this reason, they do what they know best. They continue the rhetoric of ‘motherland,’ ‘nation,’ ‘flag’ and they look at this new dynamic with Greek Cypriots through an ethno-nationalistic perspective…. Because the society still believes in the fairy tale that the most loudly nationalistic ones will have the best relations with Turkey, and that this will bring welfare.”

https://cyprus-mail.com/2022/10/16/greek-cypriots-keeping-north-afloat/

Gloomy outlook leading Turkish Cypriots to leave the island

Esra Aygin 

“From now on, the struggle for life for us, will continue under different conditions in a different geography. Goodbye…” So posted Turkish Cypriot Ömer Naşit on social media from the Larnaca airport earlier this month, as he was leaving Cyprus for good with his family.

It is currently not uncommon to see young Turkish Cypriots announce to their friends on social media that they are leaving to seek a future elsewhere. Although there are no statistics on how many have recently left Cyprus, or moved to the south of the island, it would be safe to say that everyone knows at least someone, who has left or is planning to leave.

Suffocating economic, social and political problems are behind most people’s decision to leave.

And, according to a survey conducted by The Centre for Migration, Identity and Rights Studies (CMIRS) conducted among 500 people this month, a disconcerting 35 per cent of Turkish Cypriots said they would move to another country if they had the chance.

In the CMIRS survey, which is repeated every three months, and which also measures political confidence, social confidence, individual confidence and sense of happiness among Turkish Cypriots, as well as how these are affected by current developments, a whopping 94 per cent said things are not going well in the northern part of the island.

From the time the three-monthly surveys started in 2013, the percentage of people who think that things are not going well has reached record levels, according to CMIRS Director Mine Yücel. She said that only about 20 per cent of Turkish Cypriots say they have confidence in the future.

“This is very alarming for society,” Yücel added. “It is clear that a society that has no confidence or hope in the future is going through a serious depression, and that this will lead to serious social problems.”

According to survey findings, Turkish Cypriots think the biggest problem is economy and inflation. Only seven per cent of those surveyed said their economic situation was good.

The survey also showed that the economic expectations of Turkish Cypriots are worse than they have ever been in the past.

“People are very pessimistic regarding their own financial situation and the country’s economic situation,” Yücel said.

Eight out of ten people believe their financial situation will worsen in the next two years, while nine out of ten people believe that the economic situation in the northern part of the island will worsen in the same time frame.

The Turkish Cypriot economy has been in free-fall in recent months as the Turkish lira has plummeted because of the interest-rate cutting policies of Turkish President Recep Tayyip Erdogan. The lira lost 44 per cent of its value in 2021 alone. It has shed a further 22 per cent this year.

The fall in the value of the Turkish lira has led to soaring prices in the northern part of the island, where the economy is dependent on imports. The annual inflation rate reached 118 per cent in August, with the prices of especially fuel and electricity mounting. Although the official currency in the north is the Turkish lira and people’s salaries are also paid in lira, many expenses like rent and school fees are in foreign currencies, which exacerbates the situation.

The dire living conditions and economic hardship sent Turkish Cypriots out on the streets in their thousands in July in a demonstration supported by trade unions, political parties and civil society organisations that saw crowds protest “social annihilation” and “impoverishment”.

Economic problems are followed by the Cyprus problem as a cause of concern, according to the CMIRS survey findings.

The fact that Turkish Cypriots see the Cyprus problem as the next big problem after the economy “demonstrates that they see the solution of the Cyprus problem as a way out, a source of hope when things are going bad,” Yücel said. “The fact that there is a stalemate in negotiations is driving people to further despair and hopelessness.”

These problems coupled with increasing crime rates, lack of trust in institutions, and a huge sense of powerlessness are pushing Turkish Cypriots to seek a future elsewhere, she added.

Social psychologist at Keele University in the UK Hüseyin Çakal agreed. “People have an increasing sense that they are losing the power to do anything,” Çakal said. “And this leads to a huge public resentment… There is a worsening trend in the north of Cyprus. People are like a rock constantly rolling downhill. The fall does not stop… This creates a huge uncertainty for people be it in their social lives, in their economic lives or other walks of life… This uncertainty leads to hopelessness. People don’t see a way out.”

https://cyprus-mail.com/2022/09/19/gloomy-outlook-leading-turkish-cypriots-to-leave-the-island/

North reeling from exorbitant energy prices, intermittent supply

 Esra Aygin 

Turkish Cypriots from all walks of life are breaking under the high cost of electricity and suffering from the continuing daily power cuts that last for hours on end.

On Monday, after receiving electricity bills for the month of March, a group of citizens gathered in front of the building of the Turkish Cypriot electricity authority KIB-TEK and threw eggs in protest. Many published photos of their electricity bills on social media and questioned in sheer desperation how, in a place where the minimum wage is 6,000 Turkish Liras (373 euros), they could pay electricity bills of 2,000-3,000 TL (124-187 euros). 

The bills for the month of March were the first after the Turkish Cypriot administration hiked the price of electricity more than 200 percent on average.  

“We have no electricity, but at the same time, there is no way we can pay the electricity bill,” tweeted journalist Ulaş Barış. 

“Imagine how our electricity bills would have looked like if we didn’t have power cuts every night in the coldest hours,” commented Tweeter user Emine Arıl. “We have come to a point where we are thankful for the power cuts. 

The costly electricity hurt the producers the most.

Businessman Tolga Ahmet Raşit, the director of ARUN flour factory posted a photo of his February and March electricity bills on social media. His bill, which was 47,000 TL (2,922 euro) in February, had risen to 200,000 TL (12,437 euro) in March. Raşit questioned how they could continue to produce under these circumstances. 

“Neither the people, nor the economic sectors have the ability to cope with these prices,” the Turkish Cypriot Chamber of Industry KTSO said in a written statement on Wednesday. “Especially for the manufacturing sector, whose main input is electricity, production has become impossible… Many enterprises will not be able to pay these bills. As a result, their electricity supply will be cut off and they will have to stop production and close. Some small enterprises have informed us that they will halt production for a period as of this month. Some are suggesting a communal civil disobedience.” 

“We are losing both, our minds and our livelihood,” announced the Union of Restaurant Owners. 

The backlash caused the administration to announce that they would subsidise electricity prices, which would result in a slight reduction in the price hike. The new numbers still indicate a 100 per cent increase in electricity prices. 

The move was widely seen as a symbolic rather than concrete step aimed at de-escalating the outburst in the community as nobody knows how it will be financed. As of Friday, the decision had still not been published in the official gazette. 

Sunat Atun, who is responsible for the finance dossier in the Turkish Cypriot administration, stated that they would need to find an additional monthly resource of 180 million TL (11 million euro) to be able to carry out the promised subsidy. Earlier, Atun had confessed that the Turkish Cypriot administration no longer has the ability to borrow from the market. 

“The government should explain how it would finance this subsidy,” said economist Devrim Barçın, warning that this step may result in price hikes elsewhere. In fact, on the same day, the Turkish Cypriot administration announced a sharp price hike in bottled gas, making it five times more expensive compared to a year ago.

“I don’t think this decrease in the price hike is sustainable,” economist Mertkan Hamit tells the Sunday Mail. “We are trying to buy a resource, whose value is increasing with a money, whose value is decreasing. The gap is increasing in both ends. A price increase is inevitable. The electricity prices will go up no matter what.” 

In the northern part of Cyprus, electricity is mainly produced using imported fuel oil. Turkish Cypriots use the Turkish Lira, which lost 44 per cent of its value in 2021 alone.

“The electricity bills before the decrease were impossible to pay,” says president Hurrem Tulga of the Turkish Cypriot Chamber of Shopkeepers and Artisans KTEZO. “Can they be paid now? It is doubtful. There is a huge anger. Businesses cannot decrease the use of electricity. A butcher cannot switch his refrigerators off. A café cannot turn its air conditioners off. The small businesses have no chance of surviving. They will close. Unemployment will surge.”  KTEZO held a demonstration on Wednesday to protest the Turkish Cypriot administration, which “keeps increasing prices for the people, but do not reduce their own expenses.” 

On top of the devastating electricity bills, Turkish Cypriots have been suffering from daily electricity cuts in the northern part of Cyprus since the beginning of this year. The cuts make life difficult for especially the young and the sick, as well as impacting every sector. The cuts – sometimes lasting up to 7 hours - are due to lack of investments in the electricity infrastructure, fuel shortages and the inability to buy some very expensive spare parts for failed turbines due to financial difficulties. 

KIB-TEK, which has a capacity of 340 mw a day is currently producing only 290 mw. Lawyer Feyzi Hansel filed a suit for damages against KIB-TEK two weeks ago for “violating its obligation to provide uninterrupted electricity.” 

According to economist Hamit, when it comes to power cuts, northern part of Cyprus is two times worse than Pakistan, which has the worst average monthly electricity supply according to World Bank data. 

“We are twice worse than the worst in terms of electricity service,” says Hamit. “We are in an awful situation.” 

The Turkish Cypriot administration has been buying electricity from the Republic of Cyprus daily.  

During a press conference last week, President Kubilay Özkıraç of the Turkish Cypriot Electricity Authority Workers Union EL-SEN stated that everyone has a debt of gratitude to the southern part of Cyprus for constantly providing them with electricity. He also lambasted the Turkish Cypriot officials for criticizing the Greek Cypriots. 

“Our (officials) are very patriotic,” said Özkıraç mockingly. “They are cursing the (Greek Cypriots) instead of cursing those, who condemned us to darkness. Even President (Tatar) is constantly attacking South Cyprus.” 

Özkıraç stated that three of the five generators have been out of order and in need of spare parts for months now. He also said that a thermal plant is also out of order. 

“Unless investments are not made, the power cuts will continue,” said Özkıraç. “Unfortunately, we have a chaos right now and this will continue.” 

KIB-TEK, which has a debt stock of 2 billion TL (124 million euro), had to borrow another 50 million TL (3 million euro) this week to buy fuel. According to Özkıraç, state institutions owe around 900 million TL (56 million euro) to KIB-TEK. Last week, the electricity supply of the offices of Turkish Cypriot leader Ersin Tatar was cut off because of outstanding electricity bills. 

Economist Hamit questions how anyone can expect economic development or sustainable growth in a country with so many electricity cuts. ““Electricity is the main input of all production,” he continues. “In that, it determines the price of everything. If we want to produce, we need to provide affordable, uninterrupted electricity.” 

Hamit continues: “If you make electricity so expensive on the one hand, and have power cuts every day, you force many businesses to work with additional costs due to the use of generators etc. In which case, it would be impossible to control the prices even in local production.”

In fact, according to the Turkish Cypriot statistics department, the inflation rate in March was 83.19 per cent compared to the same month last year. The inflation rate was 13.05 per cent compared to last month. The highest increase was in the price of electricity by over 200 per cent. 

The dire living conditions and economic hardship sent Turkish Cypriots out on the streets by thousands last week. In a demonstration supported by trade unions, political parties and civil society organisations, crowds protested “social annihilation” and “impoverishment” in the northern part of Cyprus. 

“In just one month, we surpassed the average annual inflation level in the EU, which is around 7 per cent,” underlines Hamit. “We have hyperinflation. We are rapidly moving towards becoming one of the least developed economies in the world. The poverty spiral will grow exponentially.”

https://cyprus-mail.com/2022/04/10/north-reeling-from-exorbitant-energy-prices-intermittent-supply/