Cyprus: Anastasiades presents Plan B for the Economy

Cyprus: Anastasiades presents Plan B for the Economy

Cypriot President Nicos Anastasiades announced in his speech on Wednesday the Plan B including the government’s measures to strengthen the liquidity of companies and the economy in general.

In summary, the measures announced by President Anastasiades focus on the following points:

  1. Granting liquidity amounting to 800 million euros for financing Small and Medium-Sized Enterprises, through the Cyprus Entrepreneurship Fund. Beneficiaries will be small and medium-sized enterprises with a maximum staff of 250 people per company.
  2. For purposes of granting loans to Cypriot small and medium-sized enterprises and medium-sized companies, the government has decided to collaborate with the European Investment Bank to increase its lending plan by 500m euros. Beneficiaries will be companies that have been registered and operate in Cyprus that employ up to 3,000 employees per company.
  3. The Council of Ministers approved the participation of the Republic of Cyprus in the Pan-European Guarantee Fund, which was created for the purposes of addressing the effects of the COVID-19 pandemic on the Member States of the European Union. Cyprus is expected to raise 300m to 400m euros from the fund for the needs of the Cypriot economy. Beneficiaries will be Small and Medium-Sized Enterprises and Medium Capitalization Companies struck by the pandemic. It should be noted that the loans granted will be guaranteed by 80% by the Pan-European Guarantee Fund.
  4. An interest rate subsidy plan for new business loans to businesses, including self-employed workers, who face a lack of liquidity as a result of the pandemic. It concerns loans concluded or to be concluded from 1 March 2020 to 31 December 2020. Beneficiaries will be all companies and self-employed, provided that they are not considered problematic under the European Commission’s definition. The measure is in line with the guidelines issued by the European Commission. The subsidy will be subsidized for 4 years as follows: For the first two years the interest rate will be subsidized up to 3.5 percentage points, while for the third to fourth year the interest rate will be subsidized by 2 percentage points for Small and Medium-Sized Enterprises and 1.5 percentage points for big business
  5. The Council of Ministers, in order to support home ownership, decided to subsidize interest rates for a specified period of time and with a fixed maximum loan amount. It concerns loans that have been concluded or will be repaid from 1 March 2020 to 31 December 2020, and will not exceed 300 thousand euros. The duration of the subsidy will be four years and will amount to 1.5 percentage points of the interest rate.
  6. A subsidy Plan for Very Small and Small-Sized Enterprises and Independent Employees. The aim of the plan is to cover part of the rent and operating expenses. The total amount of the subsidy exceeds 100 million euros. The sponsorships apply to 50,000 very small and small-sized businesses and self-employed people who employ up to 50 employees. The amount of the one-time sponsorship is distributed as follows: Independent employees and very small companies that fully or partly suspended their operations and were included in the Special Plans of the Ministry of Labor in the period 13 April – 12 May 2020 and employed:

(a) Up to one person: € 1250

(b) From 2 to 5 persons: € 3000.

(c) From 6 to 9 persons: € 4000.

(d) From 10 to 50 persons: € 6000

  1. In order to shield the recovery process, the Council of Ministers decided to instruct all competent authorities to immediately announce tenders for all development projects based on the President’s announcements or other projects that are mature, regardless of their scheduled announcement period based on the budget.
  2. In order to strengthen the tourism sector and the interconnections of Cyprus, an additional incentive plan amounting to 6.3 million euros was decided which, combined with the current plan totals 15.7 million euros that will be paid by the end of 2020.
  3. In order to strengthen the tourism accommodation and foodservice sector, a reduction in the VAT rate from 9% to 5% was decided for the period from 1 July 2020 to 10 January 2021.
  4. In addition to the above and in an effort to support and strengthen the agricultural sector, a total of 22 million euros will be allocated, as the Minister of Agriculture stated yesterday.

The President stressed that the total amount of State grants to secure jobs, cover part of the operating expenses and rents of self-employed workers and businesses, amounts to or will exceed 430 million euros.

At the same time, in order to strengthen liquidity, it is possible to withdraw loans totaling 1.7 billion euros, without including the subsidy of interest rates by the State for business and housing loans.

The President of the Republic also stated that the support in targeted sectors would continue, with specific conditions until 12 October, taking into account both the reopening of the vast majority of companies and the potential of the State.

In summary, in the context of strengthening liquidity, the government proceeded, among other things:

– In suspending the repayment of installments and interest on loans and credit facilities for a period of 9 months,

– In suspension of VAT payment until November 10, 2020,

– In suspension of payment of increased contributions to the GHS,

– In the extension of the period of repayment of overdue social contributions,

– In Providing tax incentives to reduce rents,

– Suspending eviction and auction procedures,

– In decreasing the price of electricity.

– In the provision of allowance to each foreign student amounting to 750 euros, while the State was charged with the accommodation and food expenses during the period of the compulsory isolation of all repatriates. In addition, the State has borne the cost of carrying out molecular tests, which to date amount to more than 100 thousand.

The total cost of the above measures totals approximately 26 million euros. /ibna