President Nicos Anastasiades on Wednesday evening pledged €430m indirect government assistance and the unlocking of up to €1.7bn in new credit facilities designed to jumpstart an economy crippled by the two-month-long coronavirus closures.
“I am confident that with today’s generous government support and diligence and tenacity, we shall overcome this crisis,” Anastasiades said during a live televised address to the nation.
“It goes without saying,” he added, “that restarting the economy is intertwined with the evolution of the epidemic’s trajectory.”
The president went over a raft of upcoming fiscal and lending facilities comprising the second stimulus package lasting until the end of the year.
Some €800m in liquidity would be made available through the Cyprus Entrepreneurship Fund – a joint venture of the European Investment Bank and the Republic of Cyprus – to finance small and medium-sized enterprises (SMEs).
Eligible for this will be SMEs with a maximum of 250 staff per business.
Likewise, in partnership with the European Investment Bank, the government will increase by €500m from the existing credit line to SMEs and mid-caps. Eligible are companies registered and operating in Cyprus and employing up to 3,000 staff.
Earlier, the cabinet also green-lit Cyprus’ participation in the Pan-European Guarantee Fund, set up to tackle the economic fallout from the Covid-19 pandemic.
Anastasiades said Cyprus is expected to tap between €300m and €400m from this fund, the beneficiaries of which are SMEs and mid-caps damaged by the effects of the pandemic.
The loans in question will be guaranteed by the Pan-European Guarantee Fund, up to 80 percent. To be eligible, businesses must not have axed any jobs during the restrictions.
Moreover, the government will roll out an interest rate subsidy scheme covering businesses as well as self-employed people who are cash-strapped due to the pandemic. It relates to loans granted, or to be given, from March 1 to December 1, 2020.
Valid for four years, the scheme breaks down as follows: during the first two years the interest rate will be subsidized to up to three percentage points; for the third and fourth years, the subsidy will be at two percentage points for SMEs, and 1.5 percentage points for large corporates.
Another support measure relates to subsidizing rents for a fixed duration and with a ceiling on the number of home loans. These are loans granted, or to be issued, between March 1 to December 31 and will not exceed €300,000 per case.
Also, Anastasiades pledged direct grants to small businesses and the self-employed, covering a part of rental costs and operating costs, carrying a €100m price tag for the state.
It applies to around 50,000 small businesses that employ up to 50 staff, which partially or wholly suspended their operations and which enrolled in the special assistance programs of the labor ministry for the period April 13 to May 12.
The one-time grant works as follows: for employing up to one person, €1,250; from two to five people, €3,000; six to nine people, €4,000; 10 to 15 people, €6,000.
The government will also be rolling out an incentives schemes worth €6.3m for the tourism and aviation sectors, bringing the total allocated amount by year’s end to €15.7m.
Hotels and catering operations will benefit from a reduction in VAT from 9 percent to 5 percent, valid from July 1, 2020, to January 10, 2021.
And the government has earmarked €22m in grants to support the agricultural sector.
Meantime the cabinet has instructed all government departments to launch tenders for development projects immediately. The new parliament building is exempt.
More details on the stimulus measures are to be provided by the finance minister during a press conference scheduled for Thursday. The cabinet is also due to meet on Thursday.
Returning to the virus itself, Anastasiades invoked teamwork: “I knew that however correct, stringent or necessary the [restrictive] measures were in dealing with the threat, they would never have been enough were it not for your will, contribution and sacrifices.
“Today, I feel proud of you all because you have once again demonstrated a sense of humanity, solidarity, and patriotism.”
Referring to some catering businesses, the president did not omit to harangue “the minority… in their drive to make a profit, are taking advantage of young people’s impulsiveness and are disregarding the hygiene protocols.”
He re-issued a warning to those flouting social distancing rules.
“I regret to say this, but I have no choice but to be strict and clear: the state shall not tolerate and shall not allow those who disregard health and social responsibility rules to persist with behaviors that jeopardize us all.”