Cyprus Mail

Bumpy ride for government’s Estia scheme in House

Opposition parties said on Monday they intend to ‘cross’ the funds in the 2019 budget earmarked for the controversial Estia debt relief scheme when the budget goes to a vote later this month, despite warnings that doing so would stop the programme in its tracks.

The matter came up at the House finance committee during a review of the dozens of amendments to the 2019 state budget, which combined have added €16m to the expenditures side of the balance sheet.

Marios Mavrides, an MP with the ruling Disy party, said the budget item allocated to Estia should not be ‘crossed’ as this would prevent commercial banks – which along with the government are participants in the scheme – from offering the plan to customers.

‘Crossing’ means that the legislature withholds a budget item, forcing the executive to go to the House and explain its use, before the cash can be released.

Mavrides brushed off the notion that parliament was being ‘blackmailed’ by the banks to release the funds. If the funds were withheld, he noted, thousands of debtors would be left in the lurch, unable to apply for the debt relief scheme.

For 2019, the government plans to spend €33m on Estia.

Regardless, main opposition Akel said that they, along with other parties, plan to withhold the Estia budget item.

This was being done to scrutinise the process, said Akel MP Stefanos Stefanou. It had nothing to do with his party’s criticism of the scheme, which in their opinion does not cover truly vulnerable households.

“The Estia scheme’s primary objective is to subsidise the banks, while several millions will go out of the pockets of taxpayers and into the pockets of the banks,” Stefanou said.

Regarding the additional spending requested by the government on other items, €500,000 has been allocated as a VAT refund to young couples buying land on which they plan to build their first house. Those eligible will initially pay the full 14 per cent VAT, and will later be refunded so that the effective VAT rate is reduced to 5 per cent.

Elsewhere, some €479,000 has been earmarked for the Asylum Service for hiring 21 additional employees on a temporary basis.

Another €1.5m will be spent on purchasing the services of foreign consultants who will be advising the government on how to tighten up eligibility criteria for the citizenship-by-investment scheme.

Almost €1m will go to refurbishing the Filoxenia building so that it can host courtrooms.

Parliament will get an extra €500,000 for hiring 22 additional employees, as well as €2.08m for construction works to expand the existing parliament building.

And €100,000 has been set aside for the cost of printing the 11 volumes of the ‘Cyprus File’.

The presidential palace meantime will receive €1.55m for installing new security systems.

In other business, the House committee was told that the government intends to use 14 state-owned plots of land to finance the Solidarity Fund. The total value of the land is estimated at €100m.

Opposition MPs questioned whether the transaction was constitutional, and asked why the government had not first sought legal advice from the attorney-general.

A finance ministry official said the law governing the operation of the Solidarity Fund has been amended, removing from it clauses that might clash with EU law on state aid.

For 2018, the government has already allocated €25m to the fund, which will be tapped to provide relief to legacy Laiki depositors and bank bondholders whose investments were wiped out in the 2013 bail-in.

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