The Minister of Finance, Konstantinos Petridis, made a detailed presentation on the new package of support measures.
In the presentation of the Minister of Finance Mr. Konstantinos Petridis for the New Support Package of the Economy he stated that in this test that the country is going through, which is not only health but also economic, we had assured from the beginning that the Government will stand by citizens, employees and businesses. He emphasizes that we acted on time and immediately, and a large package of support for our economy is already in progress, which includes more than 60 meters and which costs close to 1.2 billion euros.
As a government, the Minister noted, we have the certainty that the gradual lifting of restrictive measures and the reactivation of the economy will allow us to move on to the counterattack, to cover the lost ground. We are entering a second period aimed at restarting the economy.
Specifically, he stated that in this second period, the period of restart, the Government, with yesterday's decisions of the Council of Ministers, adopts a new, more targeted package of measures. Mr. Petridis told me that his intention is to immediately inform the Parliament about the new support package, looking forward to the cooperation of all, because what our citizens and the market expect at the moment are not political confrontations but coexistence so as to give a sense of trust. in the market, and get out of this crisis strong.
The new economic support package includes the following:
1. Participation of the Republic of Cyprus in the Pan-European Guarantee Fund
This is a new tool proposed by the European Union to address the effects of the pandemic COVID-19 in the EU Member States, whose recommendation was approved by the EIB Board only on Tuesday 26/5.
With its decision yesterday, the Council of Ministers approved the participation of the Republic of Cyprus in the Pan-European Guarantee Fund with a contribution of € 32,5 million in the form of guarantees.
The fund will provide up to 80% direct guarantees to Financial Institutions for Media Financing. It also includes the possibility of providing guarantees to national guarantee plans.
Beneficiaries will be SMEs and Mediation Capital Companies (which employ up to 3000 people) to have access to sufficient liquidity to meet the challenges posed by the crisis and to contribute to the restart of their economies.
Member States participating in the Guarantee Fund will contribute a total of € 25 billion in the form of guarantees through which the fund is expected to channel up to € 200 billion in targeted financing to SMEs and crisis-affected medium-sized companies. COVID-19..
Like all European Investment Bank financing, the Pan-European Guarantee Fund has no quotas for member countries. It is estimated that the companies of Cyprus will be able to benefit with an amount between € 300 - € 400 million for the needs of our companies.
2. Concession Plan for Government Guarantees to EIB for granting loans to Cypriot small and medium enterprises and medium capitalization companies
It is an exploitation of an existing plan that has been operating since 2014 with an economic agreement between the Cypriot Government and the EIB in order to strengthen the Cypriot economy and finance the media.
The Plan has a great impact and has been positively evaluated by both the EIB and an independent consulting firm. The government guarantee is given to the EIB, and not to the companies or banking institutions participating in the Plan, and agreements are signed between the EIB and the banking institutions participating in the Plan.
Based on the above, the Council of Ministers decided to increase the total amount of the Plan by 500 million Euros.
Beneficiaries:
Cypriot companies with up to 3,000 employees, registered and operating in Cyprus.
Favorable Loan Terms:
- The interest rates are lower compared to the interest rates that the banking institutions would charge without the mentioned EIB financing, as the Plan provides for an economic advantage of at least 0.5 percentage points (50 basis points).
- In addition, interest rates on loans entered into under this Plan may be subsidized by the "Government Interest Rate Grant Scheme"
- Long loan term (up to 12 years)
- Choice for fixed or floating interest rate
- Even more favorable interest rate with additional reduction (0.50 percentage point lower) in companies that meet the criteria "Jobs for Youth")
Note:
- For companies that will additionally utilize the said Plan together with the Government Interest Rate Scheme, it is understood that the term applies: no redundancies of more than 2% of the staff employed at the date of the announcement of the Plan without replacement (except for reasons dismissal without notice is justified)
3. Liquidity up to € 800 million for media financing through the Cyprus Entrepreneurship Fund (TEK)
TEK was established in 2013 by agreement between the EIB and the Republic of Cyprus with the aim of facilitating media funding by providing loans on favorable terms by the Banking Institutions.
Cyprus Entrepreneurship Fund Management:
The management of TEK is entrusted to the EIB European Investment Fund, which oversees the process, without the involvement of the Government in the lending process.
Financial tool:
Co-financing and risk sharing (50% -50%) between the Government and the Banking Institutions participating in the Plan. Therefore, the Government will receive a loan of € 400 million from the EIB to finance 50% of the liquidity.
Beneficiaries:
Mass media with a maximum number of employees of 250 people.
Loan amount:
Up to € 1.5 million
Favorable Loan Terms:
- Interest rates are lower compared to the rates that would be charged by banking institutions. Indicatively, the interest rates for the program that are already in force, vary depending on the risk of the loan (low risk 2,55% - 3,85% and high risk 3,375% - 4,5%).
- Additionally, interest rates on loans under this Scheme may be eligible for the subsidy from the Government Interest Rate Grant Scheme.
- Long loan term (up to 12 years)
Note:
- For companies that will additionally utilize the mentioned Plan together with the Government Interest Rate Grant Scheme, it is understood that the condition of non-dismissal of more than 2% of the staff employed at the date of the announcement of the Plan without replacement applies (except for reasons justified dismissal without warning)
4. Interest rate subsidy plan for new business loans
Objective: Improving liquidity prospects for businesses, including self-employed workers, who are experiencing a sudden shortage of liquidity by subsidizing interest rates on new business loans. The interest rate subsidy for a specified period of time as well as a specified maximum loan amount, can be the appropriate, necessary and targeted solution under the current circumstances.
The measure is in line with the guidelines included in the "European Commission Declaration on State Aid Measures to Support the Economy during the Spread of COVID19" and specifically with temporary state aid measures in the form of direct grants (measure 3.1 of that framework).
The competent and granting authority of the measure will be the General Accounting / Ministry of Finance.
Beneficiaries:
All non-problematic companies (based on the definition of the European Commission) on 31/12/2019, which are facing difficulties due to the pandemic. It concerns very small businesses, small, medium, large and self-employed.
The total cumulative, according to the Communication of the European Commission, should not exceed € 800 000 per company.
Loan purpose:
Meeting liquidity needs for working capital and investment purposes.
Lending period:
For business loans concluded or will be concluded from 1.3.2020 to 31.12.2020.
Prerequisites:
- New loans are granted for the purpose of increasing liquidity in the economy and can not be used to cover the repayment of existing credit facilities either serviced or non-performing, and / or be used as collateral for the restructuring of existing credit facilities.
- The companies that will join the Plan, can not lay off more than 2% of the staff that were employed at the date of the announcement of the Plan without replacement (except for reasons that justify dismissal without notice).
Interest rates:
. The interest rate ceiling for the entire loan should not exceed 4,25%.
The maximum interest rate subsidy will be four years as follows:
- In the first two years, the interest rate will be subsidized up to 3.5 percentage points (350 basis points).
- In the third to fourth year, the interest rate will be subsidized by 2 percentage points for SMEs (200 basis points) and 1.5 percentage points (150 basis points) for large enterprises
Loan amount:
There is no limit to the amount of the loan that can be taken out but the amount of the loan at which the interest rate will be subsidized cannot exceed:
i) twice the annual salary cost of the beneficiary for 2019 or for the most recent available year. In the case of companies established on 1 January 2019, the maximum amount of the loan should not exceed the estimated annual salary cost for the first two years of operation or
ii) 25% of the total turnover of the beneficiary in 2019
5. Interest rate subsidy plan for new mortgages
Objective: To support households in concluding loans for home-based purposes. The interest rate subsidy for a specified period of time as well as a specified maximum loan amount, can be the appropriate, necessary and targeted solution under the current circumstances.
The competent and granting authority of the measure will be the General Accounting / Ministry of Finance.
Lending period:
For housing loans that have been concluded or will be concluded from 1.3.2020 to 31.12.2020.
Interest rates:
. The interest rate ceiling for the entire loan should not exceed 2,30%.
. The maximum interest rate subsidy will be four years and the interest rate will be subsidized up to 1,5 percentage points (150 basis points).
Loan amount:
The loan amount cannot exceed € 300.000.
Note:
New mortgages cannot be used to cover the repayment of existing or non-performing mortgages.
6. Subsidy Plan for Very Small and Small Businesses and Independent Employees
Purpose:
Sponsorship to cover rent, or other debts and operating expenses
Beneficiaries:
Very small and small businesses and self-employed workers who employ up to 50 staff members, who were included and approved in the Special Plans of the Ministry of Labor, Welfare and Social Insurance that are applied in the context of emergency measures to deal with COVID19 pandemic during the period April 13 - May 12, 2020.
It is understood that, for all beneficiaries, the relevant conditions for non-dismissal of staff included in the Special Plans of the Ministry of Labor, Welfare and Social Insurance for dealing with the effects of the COVID19 pandemic apply,
Objective: To cover part of the operating expenses, including rent.
Total cost:
About € 100m
Beneficiaries: 40.000 - 50.000 very small, small businesses and self-employed.
Subsidy / lump sum grant:
Independent employees and very small businesses that were under full or partial suspension of their work and were included in the Special Plans of the Ministry of Labor, Welfare and Social Insurance, from April 13 to May 12, 2020, and employ up to 1 person.
€1250
Independently employed and very small businesses that were under full or partial suspension of their work and were included in the Special Plans of the Ministry of Labor, Welfare and Social Insurance, the period April 13 - May 12, 2020, and employ 2 - 5 staff.
€3000
Independently employed and very small businesses that were under full or partial suspension of their work and were included in the Special Plans of the Ministry of Labor, Welfare and Social Insurance, the period April 13 - May 12, 2020, and employ 6 - 9 staff.
€4000
Independent employees and small businesses that were under full or partial suspension of their work and were included in the Special Plans of the Ministry of Labor, Welfare and Social Insurance, from April 13 to May 12, 2020, and employ 10 - 50 staff.
€6000
7. Direct promotion of mature Development Projects
In order to strengthen the recovery, the Council of Ministers today decided to instruct all competent authorities to immediately announce tenders for all development projects that are mature and ready for announcement, regardless of their planned budget period.
It is understood that the work concerning the House of Representatives is excluded.
8. Motivation plan for airlines with the aim of strengthening the connectivity of Cyprus and supporting the tourism sector, amounting to € 6,3m.
The aim of the Plan is to recover the tourist flow and to stimulate passenger traffic in order to mitigate the effects of the crisis in the tourism sector. The Plan provides for additional support for all airlines for a period of seven months with a subsidized route to Cyprus, and will cover aircraft occupancy from 40% -70%.
It is noted that the new Plan is complementary to the existing plans that are being implemented, for which additional credits of € 9.369m will be available. until the end of 2020.
9. Advertising program with travel agents to attract tourism and promote Cyprus as a safe tourist destination, amounting to € 10m.
The program will start to be implemented from June 1 with the aim of increasing the tourist flow to Cyprus both during the summer and winter months.
10. Reduction of the VAT rate from 9% to 5% for the period 1/7/2020 to 10/01/2021 in the sectors of tourist accommodation and catering
The reduction is expected to benefit areas most affected by the pandemic Covid 19, in particular the catering, hotels and tourist accommodation sectors. With the reduction of VAT in the sectors of catering, hotels and tourist accommodation, a reduction in retail prices is expected for the benefit of both consumers and businesses due to the stimulation of consumer demand.
11. Extension of the submission of tax returns by employees.
Both the submission of the tax return and the payment of the tax due are extended until the end of October 2020.
12. Deletion of charges
which were probably imposed due to the untimely submission of tax returns for the period that ended on 10/04/2020 and 10/05/2020
13. Extension of deadlines for submission of supporting documents to the Home Plan and possibility of submitting a new application
Given the restrictive measures that have been applied to travel during this period and in order to give citizens more opportunity to secure the necessary documents and supporting documents, the Council of Ministers, during its meeting yesterday, approved:
- Re-extension of the deadline for submission of the necessary supporting documents of one month, by interested parties who had submitted an application until 31.12.2019 for inclusion in the Home Plan. The new deadline is 31 July 2020 instead of 30 June 2020, and
- Ability to submit an application by borrowers who had not submitted an application for inclusion in the Home Plan until 31.12.2019 and wish to do so. New applicants must complete and submit to the Banking and other institutions their application provided for in the Plan from 2020 June 15 until 2020 June XNUMX.
Source: philenews