Politicians on Tuesday urged the state to step in to help small-to-medium-sized enterprises (SMEs), which have been struggling since the 2013 financial meltdown.
During a discussion at the House commerce committee, MP Costas Costa of main opposition Akel harangued the present administration for its “indifference” towards SMEs, which he called the backbone of the economy.
“SMEs have suffered a severe blow, and as a result one business after another is shuttering,” he said.
“It is not enough that the government is provocatively indifferent to their plight, it’s making matters worse through certain policies such as the unregulated shop hours, which are the coup de grace for small businesses.”
The Akel MP called for the establishment of a state entity under the commerce ministry that would manage EU and Cypriot funds targeted at SMEs.
For his part, Edek’s Elias Myrianthous said the commerce ministry is mulling a €120m programme that would subsidise part of the interest on loans granted to SMEs.
The mooted programme would be launched by 2020, he added.
According to Myrianthous, the closure of the Co-op Bank has resulted in the disruption of EU-backed, low-interest financing programmes for SMEs which had been made available through that lender.
Access to finance is a major constraint on the growth of SMEs, according to an October 2017 working paper commissioned by the Central Bank of Cyprus.
The paper found that Cypriot SMEs with three to 19 employees constitute about 88 per cent of the surveyed population of firms.
The European Union defines SMEs as firms “which employ fewer than 250 persons and which have an annual turnover not exceeding €50m, and/or an annual balance sheet total not exceeding €43m.”
State intervention in subsidising SMEs would further increase the size of government. In 2018, the Cypriot state budget came to approximately 30 per cent of GDP.