COVID19: Cyprus economy gasping for oxygen

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Cyprus’ economy is in need of oxygen and the necessary political consensus to support business during the coronavirus pandemic said Finance Minister Constantinos Petrides.

Petrides held consultations on Monday via teleconference with the parliamentary committee of financial and budgetary affairs on four bills drafted to support the Cypriot economy.

He said the discussion took place “in a positive climate”  but there were unrealistic demands being made on the government.

“We are close to reaching a parliamentary majority for an extremely important package in support of Cypriot businesses to be approved,” Petrides told CNA.

Referring to a bill on government guarantees for bank loans to businesses, Petrides said, “we have included as many political party proposals as we could.”

“MPs put forward a number of issues which will be discussed again when the committee is convened later this week.”

A government financial package worth around €2 bln for virus-hit businesses has been held up in parliament over how the state guarantee for loans scheme would work.

The Finance Minister said during the meeting issues were raised which are not in line with the government’s philosophy nor the European Commission’s framework.

The guarantees scheme constitutes an incentive for banks to allocate part of their liquidity to businesses under favourable conditions, as defined by the European framework.

It reduces the risk for banks which enables them to make the most of their liquidity reserves.

The state, Petrides said, cannot substitute financial work nor can it take away the liquidity of banks and use it.

The bill’s second part, “has to do with the government implementing its commitment for flexibility and continued fiscal support, always within its capabilities.”

He said opposition parties wanting the government to offer financial support beyond its means “does not constitute a concrete proposal.”

“The government has shown its goodwill and the discussion must soon be completed.”

“The market needs oxygen, while the least citizens expect from politicians is to reach a consensus to support the economy with a prudent policy without placing it in further danger,” Petrides added.