After tough fight, state-backed loan bill expected to pass

A bill for €1 billion in state-backed loans to Covid stricken businesses is expected to be approved by parliament on Thursday, including a controversial provision to have the auditor-general monitor the process.

The amendments were discussed by the House finance committee on Wednesday, including one providing for the auditor-general Odysseas Michaelides to take part as an observer. Other amendments redistribute the available funds among small, medium, and large businesses, while a provision banning dismissals for six months has also been added.

Committee chairwoman, Diko MP, Christiana Erotokritou said the fund allocation has changed with €300m earmarked for small businesses and self-employed persons, €550m will go to very small and small and medium businesses, and €150m will be granted to large enterprises.

The criteria relate to the number of staff and turnover.

The original proposal provided for €300m to go to very small businesses and €700m to the rest without other conditions.

“The allocation was made based on the views and information we had at the finance committee,” Erotokritou said.

She said the overwhelming majority of committee members agreed with Diko’s proposal for strict audits and transparency.

“This provision seems like it would be approved thus there will be a transparent and fair procedure of granting state guarantees with equal criteria for all, without any favours or vice versa,” she said.

The amendment provides for a supervising committee comprised off finance ministry, central bank, and treasury officials. The auditor-general will participate as an observer.

Erotokritou said the committee made sure all amendments were within the guidelines set by the European Commission on state guarantees.

The scheme also assigns the risk – 70 per cent for the state and 30 per cent fort banks – in the event a borrower defaults on the repayment.

Total liquidity granted by the banks is expected to reach €1.4bn.