Cyprus Mail
Cyprus

Top official raises doubts over Estia loan repayment scheme

The state aid watchdog said on Wednesday that a debt relief scheme for vulnerable homeowners was unfair and an indirect subsidy to banks.

State aid commissioner Theophanis Theophanous told MPs his office had never been contacted about the scheme and that the finance ministry went straight to the European Commission.

Speaking before the House finance committee, which discussed his office’s budget, Theophanous said the scheme was unfair and would cause social upheaval. The commissioner added that he considered it indirect financial assistance to banks.

Dubbed Estia, the scheme’s beneficiaries will have one-third of their monthly loan repayment subsidised by the taxpayer.

To be eligible, a household’s annual net gross income must not exceed €60,000 for couples with four dependents or more; €55,000 for a couple with three dependents; €50,000 with two dependents; €45,000 with one dependent; €35,000 with no dependents and €20,000 for single persons.

Previously, all households (irrespective of dependents) with an annual income of up to €50,000 had been eligible.

Additionally, under the updated criteria, a household’s net assets, excluding the primary residence, cannot be more than 80 per cent of the market value of the primary residence. The cap on the value of the other assets is €250,000.

The scheme, which experts criticised as favouring strategic defaulters, requires approval from the European Commission, which must ensure that it does not constitute state aid.

Finance Minister Harris Georgiades has said that he expected approval this month without major changes.