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Cyprus

Government ups pressure on opposition to pass loans bill

Government spokesman Kyriakos Koushos

The government on Tuesday sought to apply pressure on opposition parties not to torpedo a bill on state-backed loans aimed at giving cash-starved businesses a lifeline.

The government bill is coming up for a vote at the House plenum on Thursday.

“Our request is for this matter to be handled in its real dimension,” government spokesman Kyriacos Koushos said.

He added the economy and small-to medium-sized businesses “need liquidity, and at the moment the only way to provide this liquidity is through the plan submitted by the government.”

On Monday parliament formally decided to fast-track the bill for a plenary vote, to take place during the last session of the House before it dissolves for May’s legislative elections.

The government had tabled the bill weeks before.

The risk remains that opposition parties may tinker with the legislation to the point that the government is forced to withdraw it – for the second time.

Already junior opposition party Diko has tabled an amendment that would have the auditor-general supervise the granting of the state-guaranteed loans – something the government vehemently opposes.

According to the government, the proposed scheme aims to preserve jobs and avert company bankruptcies. It will see up to €1 billion in loans disbursed – coming from the EU’s Recovery and Resilience Facility – which is expected to boost liquidity in the market by €1.4 billion.

Banks will grant the loans according to criteria – the loans will be equal to the sum of the employees’ salaries in a given company, or to 25 per cent of turnover during 2019.

The state will guarantee the loans and, in the event of failure to repay, the liability is split between the state and the bank at 70-30.

The interest rate will be based on the European Central Bank base rate – currently zero.

Loans must be approved by the end of the year. Businesses receiving a loan cannot sack any employee for six months. And any business or self-employed person participating in prior assistance schemes, will be ineligible.

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