Cabinet scraps bill for government loan guarantees

The Cabinet on Tuesday withdrew a bill that would allow the government to provide guarantees for loans to be given to businesses affected by the coronavirus pandemic.

The bill, just one among a bundle of government proposals to keep the economy afloat, ad emerged as a matter of contention between the government and the island’s political leaders, particularly within the House Finance Committee.

The plan involved the granting of €1.5 billion worth of government guarantees that will provide liquidity to businesses that went numb after the outbreak of the virus.

It was initially proposed as a part of a bundle of three measures, which the Finance Minister Constantinos Petrides said cannot be treated individually but as a whole. The other support schemes involved direct grants to very small businesses, and tax breaks for property owners who move to lower rent prices.

In statements after the meeting, Petrides said that though the government, despite its reservations, accepted a series of adjustments to the bill proposed by MPs in the Committee, it was nevertheless withdrawn on Tuesday.

According to Kathimerini Cyprus, the scrapped bill will likely be replaced by an interest rate subsidizing scheme, with the government to chime in on interest rates on both new and old loans with the ultimate aim of keeping the loans out of the non-performing area.

Though the full scope of the plan B will be finalizing within the week and announced the following week, a bill that would allow the government to contribute through subsidizing interest rates on loans would not need to go through Parliament for approval.