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Panayiotou stresses need to tackle drought in agriculture at EU Council

by THEFUTURE.TEAM

September 26, 2024

Minister for Agriculture, Maria Panayiotou, talked about the effects of drought on Cyprus, as well as the measures that the EU can take to support the agricultural sector across Europe, and presented the recent joint statement by the MED9 on the issue, during the Agriculture and Fisheries Council of the EU held in Brussels.

During a discussion on the state of agricultural markets in the EU, Panayiotou referred to the significant impact that a prolonged drought has had on Cyprus, resulting in significantly reduced yields for irrigated and non-irrigated crops, the Ministry of Agriculture, Rural Development and Environment said in a press release on Wednesday.

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The Minister, the press release adds, “pointed out that, due to limited water availability in dams, water supply for agricultural purposes has been reduced by 33.7% for 2024, while the forecasts for the following years are not favourable.”

Panayiotou called on the European Commission to activate the agricultural reserve to provide support to affected farmers, but also to further simplify support measures related to water management under the Common Agricultural Policy.

During the meeting, the Minister also presented the joint statement on the impact of drought on the primary sector, which was issued by the Ministers of Agriculture of the nine Mediterranean EU Member States (MED9) during a recent meeting in Cyprus.

Panayiotou referred specifically to the need for a collective response to this phenomenon that threatens food production and the social fabric of rural areas in the EU and pointed out that the joint statement reflects the practical commitment of the Mediterranean Member States to find solutions that will allow sustainable water management and will be included in EU policies.

According to the press release, the joint communication of the MED9 received the support of other Member States, in addition to the countries that had signed it in Cyprus.

During a working lunch, Professor Peter Strohschneider presented his report on the results of the strategic dialogue on the future of agriculture, which was presented in early September at a joint press conference with European Commission President Ursula von der Leyen.

Panayiotou said she supports the need to further target support for farmers, with a focus on small and medium-sized farms and young farmers, as mentioned in the report. She also stressed the importance of promoting new technologies and innovation in agricultural production.

She also noted that the proposal to create two funds independent of the CAP, such as the fair transition fund and the nature restoration fund, should not limit appropriations which will be available through the next CAP in the future.

The Agriculture Minister said that Cyprus agrees with the proposed reform of the agricultural reserve, pointing out the need for a more flexible crisis management framework that will provide adequate support to farmers and allow for faster and simplified procedures, adapted to local needs and specificities.

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Cyprus Depositors Lag Behind As Mortgage Costs Rise, CBC Data Shows

by THEFUTURE.TEAM

October 6, 2026

Cyprus households are earning relatively modest returns on their savings even as mortgage borrowing costs climb again, according to new Central Bank of Cyprus data that places the country among the euro area’s weakest performers on deposit rates.

Deposits Rise, But Remain Near The Bottom Of The Euro Area

The central bank’s latest analysis, covering August 2026, found that the interest rate on new household deposits with agreed maturities of up to one year increased to 1.35 per cent from 1.27 per cent in July. Over the same period, the average rate on new house purchase loans rose sharply to 4.16 per cent from 3.78 per cent.

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The contrast underscores a persistent imbalance in how interest rate changes are being transmitted across Cyprus’s banking system. While borrowers have felt the impact of higher rates more directly, savers continue to receive returns that remain unusually low by euro area standards.

The CBC said deposit rates in Cyprus sit at the lower end of the euro area and remain an outlier. The transmission of market interest rate changes to deposits has also been weaker in Cyprus than in almost every other euro area country, affecting both households and businesses.

Borrowing Costs Are Closer To The Euro Area Median

The picture on the lending side is more mixed. Interest rates on outstanding loans and on new lending are broadly aligned with the euro area median.

According to the CBC, the interest rate on outstanding loans to households in Cyprus was only 0.1 percentage points below the euro area median, while the corresponding rate for non-financial corporations was 0.3 percentage points above it. For new lending, the weighted average rate on loans to households for house purchase was 0.2 percentage points below the euro area median, while the rate for non-financial corporations was 0.1 percentage points lower.

Still, the latest monthly data show a notable increase in mortgage pricing in August. The average rate on house purchase loans rose to 4.16 per cent, from 3.78 per cent in July. The CBC noted that this is a weighted average across different types of housing loans, including mortgages for primary residences and holiday homes.

Because the composition of banks’ housing loan portfolios changes from month to month, weighted averages can move even when the underlying rates offered by banks have not shifted by the same amount.

Consumer Credit Rises, Business Lending Eases

Consumer borrowing also became more expensive, with the average interest rate rising to 7.12 per cent in August from 6.94 per cent in July.

For businesses, the trend was more favourable. The rate on loans of up to €1 million edged down to 4.45 per cent from 4.47 per cent, while the rate on loans above €1 million fell more sharply to 3.67 per cent from 4.29 per cent.

Even so, new lending volumes fell significantly across the board in August. Pure new lending dropped to €251.40m from €415.00m in July, while total new lending, which includes refinancing and other operations, declined to €390.10m from €686.10m.

Pure new consumer loans fell to €19.30m from €23.90m, and total lending in that category slipped to €20.70m from €26.50m. Pure new house purchase loans fell to €114.40m from €149.50m, while total lending for house purchases declined to €141.90m from €205.80m.

Business lending also slowed. Pure new loans of up to €1 million declined to €35.50m from €52.30m, while pure new lending above €1 million fell to €77.00m from €162.30m.

Why Cyprus Deposits Stay Low

The CBC’s euro area comparison is especially telling for savers. Unlike lending rates, the interest rates on existing deposits in Cyprus remain near the bottom of the euro area, which the central bank described as an outlier.

The CBC attributed this in part to the high level of excess liquidity held by Cypriot credit institutions. Cyprus’ Liquidity Coverage Ratio stood at 313 per cent in August 2026, compared with a median of 182 per cent and an EU average of 158 per cent in June 2026, the latest available figures cited by the central bank.

The relatively short maturity structure of Cyprus’s banking sector was also identified as a factor weighing on deposit rates. Rates offered on new deposits are similarly subdued and remain close to those paid on existing balances, reflecting the same underlying market conditions.

In practical terms, this means the European Central Bank’s monetary policy cycle has affected borrowing costs in Cyprus more visibly than it has improved returns for depositors. Savers have received only a limited pass-through of higher interest rates, even as borrowers have faced higher costs.

Mortgage Preferences Are Changing

The CBC also highlighted a marked shift in the type of mortgage borrowing being taken out by Cypriot households.

The share of new house purchase loans carrying a variable interest rate has fallen dramatically, from almost 100 per cent at the beginning of 2022 to just 12.0 per cent in August 2026. That is now below the euro area median.

The central bank said this may partly reflect borrowers opting for fixed-rate loans for an initial period, typically three to five years, before switching to floating rates. The shift suggests households are becoming more conscious of interest rate risk, a development banks will need to reflect in their risk management frameworks.

A similar trend is visible when household and business loans are viewed together. The share of new loans to households and non-financial corporations carrying floating rates has dropped from almost 100 per cent at the beginning of 2022 to 55.9 per cent in August 2026, below the euro area median. The CBC said this could again partly be explained by fixed-rate periods early in the life of a loan, before conversion to floating rates later on.

The Bottom Line For Savers And Borrowers

For households, the latest data point to a mixed picture. Mortgage rates remain broadly comparable with the euro area, but deposit returns remain unusually low, while the cost of new house purchase loans rose significantly in August.

The central bank’s analysis suggests that the core issue for Cypriot savers is not that lending rates are especially high by euro area standards. Rather, it is that interest rate changes have been passed through to deposits far less fully than elsewhere in the currency union.