The finance ministry is trying to secure an extension of the period in which banks can provide businesses and the self-employed with state-guaranteed loans, as it expires at the end of this year.
The bill for the state-guaranteed loans was submitted to the House finance committee on Monday, prompting deputies to accuse the finance ministry of taking too long to prepare it. The Central Bank and State Treasury still have to give their approval before the bill is finalised and sent to the state legal services for processing.
“The tool of the state-guarantees was given to the member states (by the European Commission) in 2020, but unfortunately the Cyprus Republic seems to be the last country of all member states that will legislate this tool,” said the chairwoman of the committee and Diko deputy Christiana Erotokritou.
“The deadline has been known to us from the very day when the European Commission provided approval nearly two years ago,” Erotokritou added.
Permanent Secretary of the Ministry of Finance George Panteli denied accusations of delays during Monday’s house finance committee meeting.
Panteli said that the ministry “worked feverishly” to submit the bill, while at the same time saying that Cyprus had requested an extension to the current deadline from the European Commission. Any extension, however, would have to apply to all member-states and can only be given after receiving unanimous approval.
Cyprus is only one of two member states in which approval of the state-guarantees law is still pending.
“We acknowledge that there is not a lot of room for the implementation of the plan at the moment, which is why we are trying to extend the deadline into 2022,” Panteli said.
“However, I still believe that even without an extension there is a window of time which can be suitably utilised by both businesses and banks,” he added.
Panteli explained that the proposal provided incentives to banks to loan money to businesses and self-employed individuals, clarifying that without these incentives the loans would not be given.
“This minimises risks to the banks to such a degree where they can provide funding to companies that have been affected by the pandemic,” Panteli said. “We are not talking about funding problematic businesses because that is prohibited by state aid rules, we are talking about businesses that were viable and non-problematic before the pandemic struck and which can benefit from this plan,” he added.
The scheme would provide liquidity to these businesses, facilitating their continued operation and protecting jobs, something which is good for the economy. Opposition deputies complained they were being subjected to “suffocating time-frames.”
Akel deputy Andreas Kafkalias said the law gave the banks complete control over the granting of these loans and the amounts involved but added that his party “would not move in any way that would create additional problems to the procedure.”
This was reassuring to the finance ministry, as it had warned that any amendments to the bill would create additional delays because they would have to be approved by the EU’s General-Directorate of Competition and the European Central Bank. In such a case the bill might not be ready for approval by the end of the year, the deadline for implementation of the scheme.