The European Commission recommends that Cyprus secures adequate access to finance and liquidity for small and medium-sized enterprises while strengthening the health system post-Covid19.
Brussels has proposed country-specific recommendations (CSRs) providing economic policy guidance to all EU Member States focused on the most urgent challenges brought about by the pandemic and on relaunching sustainable growth.
The recommendations are structured around two objectives: in the short-term, mitigating the coronavirus pandemic’s severe negative socio-economic consequences; and in the short to medium-term, achieving sustainable and inclusive growth which facilitates the green transition and the digital transformation.
It said Cyprus should, when economic conditions allow, pursue fiscal policies aimed at achieving prudent medium-term fiscal positions and ensuring debt sustainability while enhancing investment.
“Strengthen the resilience and capacity of the health system to ensure quality and affordable services, including by improving health workers’ working conditions.”
The Commission recommends the authorities take action to “provide adequate income replacement and access to social protection for all”.
And “strengthen public employment services, promote flexible working arrangements and improve labour market relevance of education and training.”
Cyprus is urged to secure adequate access to finance and liquidity, especially for small and medium-sized enterprises.
“Front-load mature public investment projects and promote private investment to foster economic recovery.
Focus investment on the green and digital transition, in particular on clean and efficient production and use of energy, waste and water management, sustainable transport, digitalisation, research and innovation.”
Nicosia was advised to “step up action to address features of the tax system that facilitate aggressive tax planning by individuals and multinationals. Improve the efficiency and digitalisation of the judicial system and the public sector.”
Cyprus to apply for pandemic support
Cyprus will tap the European Stability Mechanism’s Pandemic Crisis Support fund to cover its elevated healthcare expenditure due to coronavirus, Finance Minister Constantinos Petrides said.
“Of course we will utilize the ESM for healthcare expenditure.”
Petrides said the Ministry of Finance will evaluate total healthcare spending due to the Covid-19 pandemic and apply to the ESM.
Cyprus has earmarked additional funds amounting to €100 mln as part of the Covid-19 response package announced by the government.
Petrides said increased healthcare spending include a new intensive care unit at Nicosia General Hospital and diagnostic checks for Covid-19 infections.
“The aim is to value this spending and to draw cheap lending from the ESM.”
Under the terms Pandemic Crisis Support, ESM member states can secure loans of up to 2% of their GDP in 2019, with loan maturities up to 10 years.
The only prerequisite stipulates that states should commit to using ESM funds to support domestic financing of direct and indirect healthcare, cure and prevention related costs due to Covid-19.