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Cyprus announces new economic package to boost economy

NicosiaPresident Nicos Anastasiades announced in a televised address last night a new set of economic measures to help businesses, the self-employed and employees soften the devastating financial effects of the coronavirus (Covid-19) pandemic.

The President elaborated that the new package of measures, which includes €430 million in direct government assistance and the unlocking of up to €1.7 billion in new credit facilities, includes the following:

  1. A liquidity grant amounting to €800 million for the financing of Small and Medium Enterprises, through the Cyprus Entrepreneurship Fund. The beneficiaries will be small and medium enterprises with maximum personnel of 250 per enterprise.
  1. For the purpose of providing loans to Cypriot small and medium enterprises and companies of medium capitalization, the Government has decided, in conjunction with the European Investment Bank, to increase the lending scheme by €500 million. The beneficiaries will be enterprises which have been registered and are operating in Cyprus employing up to 3.000 workers per enterprise.
  1. The Council of Ministers has approved the participation of the Republic of Cyprus in the Pan-European Guarantee Fund, which has been set up to combat the consequences from the Covid-19 pandemic in the member-states of the EU. Cyprus is expected to draw an amount of €300 to €400 million from this fund for the needs of the Cypriot economy. The beneficiaries will be Small and Medium Size enterprises and companies of Medium Capitalization, which have been hit by the pandemic.
  1. An Interest Subsidy Scheme for new business loans to enterprises, including self-employed, who are facing a lack of liquidity as a result of the pandemic. It concerns loans which have been contracted or will be contracted as of 1 March 2020 up until 31 December 2020. The beneficiaries will be all of the enterprises and self-employed, under the basic requirement of not being considered problematic (NPLs). The interest will be partly subsidized by the government for four years.
  1. In order to support home ownership, the government will subsidize the interest of house loans for a specified period of time and for a fixed maximum loan amount. It concerns loans contracted or to be contracted as of 1 March 2020 until 31 December 2020 and do not exceed €300.000. The duration of the subsidy will be four years and will amount to 1.5% of the interest.
  1. Subsidy Scheme for Small Enterprises and Self-Employed.

    The total amount of the subsidy exceeds €100 million and concerns 50.000 small companies that occupy up to 50 employees as well as the self-employed. Self-employed and small companies that had fully or partly suspended their activities and had joined the Special Schemes of the Ministry of Labour for the period 13 April – 12 May 2020, will receive a one-time, lump-sum subsidy based on their number of employees as follows:

    a)  Up to one person: €1.250
    b)  From 2 to 5 persons: €3.000
    c)  From 6 to 9 persons: €4.000
    d)  From 10 to 50 persons: €6.000
  1. All relevant authorities (local and national) will invite immediate tenders for all development projects and works that are ripe regardless of the scheduled period of their declaration according to the state budget.
  1. In order to strengthen the tourism sector and the connectability of Cyprus, a scheme for incentives amounting to an additional €6.3 million has been decided, which with the existing scheme rises to a total of €15.7 million to be paid until the end of the year.
  1. In order to strengthen the sector of tourist accommodation and catering, VAT applied in the specific industry will be reduced from 9% to 5% from 1 July 2020 until 10 January 2021.
  1. An amount of €22 million will be made available to the agricultural sector.

The first package of measures that was announced in March, amounted to a total of €1.2 billion. It included the support of salaried employees and the self-employed, as well as small and medium enterprises by covering the greater part of their payroll cost. The government also suspended the repayment of loan instalments and interest for a period of 9 months, suspended VAT payments until the 10 November 2020, suspended the increased contributions to the General Healthcare System (GeSY), subsidised Cypriot students stuck abroad, and much more.

At the beginning of his address, the President made sure to stress that even though Cyprus has managed to control to a great extend the spread of the disease, it has not eradicated it.

“And I say this because while the virus continues to be present in our midst and lies in wait, a minority is still behaving in a way that does not abide either by social responsibility or the collective effort to rid ourselves of the consequences of the disease, forcing us to take harsh measures again.

Unfortunately, certain people, fortunately very few, for profit-making reasons, take advantage of the impetuosity of youth to breach the health protocols of the Ministry of Health,” Anastasiades said.