The government sprung a big surprise on Monday when it presented its bill for state-guaranteed bank loans to the House finance committee. There are less than three months for the use of this tool, as the scheme, which was devised by EU institutions to help businesses affected by the lockdowns and other restrictive measures of the pandemic, expires at end of this year.
What would be the point of introducing the scheme for two months now that the pandemic restrictions are over, and the economy is on the recovery path? The scheme was needed at the end of last year and the beginning of this when many businesses were not operating and were facing serious liquidity problems. Unless there is another big surge of cases and another lockdown is imposed, there would not be much real need for the scheme in December.
The delay in introducing the scheme was caused by the government and the political parties. The first bill submitted to the legislature was eventually withdrawn by the government because the opposition parties, led by Diko, wanted the auditor-general made a member of the committee monitoring the granting of the loans, something the government did not accept. It took the government an awfully long time to draft a second bill with different provisions – a monitoring committee has been turned into a reporting committee.
This was the bill submitted on Monday, which was not quite ready, because the finance ministry is still waiting for the views of the Central Bank and the State Treasury, before forwarding it to the legal service for finalising. Cyprus and one other country are the only EU member-states not to have introduced the ECB-approved state guarantee scheme. As a result, Cyprus has requested the extension of the implementation of the scheme into 2022, something which would require unanimous approval by all EU member-states.
Finance ministry permanent secretary Giorgos Panteli acknowledged there was limited time to implement the scheme but “even without the extension there is a window that could be utilised accordingly by businesses and banks.” This, of course is assuming the parties did not make any amendments to the bill. Panteli warned if the composition of the reporting committee was changed by deputies then the government would have to seek approval from the EU’s competition directorate and the ECB.
This is no way to deal with important legislation which could create a huge cost to the taxpayer. If there are weaknesses in the law, which were not spotted because it had to be rushed through the legislature, with parties feeling obliged to approve it because time is running out, it is the taxpayer who will pick up the bill. It is just not good enough.