Cyprus Mail

Coronavirus: Approval of €2bn state guarantee bill in doubt after Diko-Akel objections

It appears the bill providing for €2bn in state guarantees to support businesses may not be discussed by parliament after Diko said it would not support it as is, thus removing its chance of being approved.

The party has asked for the postponement of the discussion, which is scheduled for Friday, saying it was not convinced over the procedure to grant the loans to stricken businesses and self-employed, as well as the supervision of the scheme.

Instead, the party proposed that the state should directly borrow the cash from banks and inject it into the economy directly to cover payrolls and other expenses.

“We agree that borrowing and financing the market are necessary moves for the survival of the economy but supporting liquidity through bank loans with state guarantees needs more processing,” Diko said.

Main opposition Akel is also looking at similar proposals, asking for time to study alternatives.

Party leader Andros Kyprianou suggested one of the solutions could be the issue of a 10-year bond to borrow from domestic sources.

The cash could then be channelled into the economy either directly by the state or through banks on the basis of criteria that will be approved by parliament, he said.

Akel thinks the current scheme does not ensure control of the procedure and the way the loans will be granted. It added that the loans will not benefit small and medium businesses.

Ruling Disy has not ruled out discussing alternatives, saying that striking an agreement on a scheme could take a few more days.

The scheme is part of government measures to shore up the economy against the effects of the coronavirus crisis.

It involves the provision of state-backed low-interest loans worth €1.750bn to businesses, individuals and self-employed so that they can manage the fallout.

An additional €250m will be used to subsidise the interest rate. It also applies to individuals, self-employed, and businesses.


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