The European Commission announced Tuesday it has approved €86.6 mln in Cypriot state aid to support companies in the tourism sector (tour operators, hotels, car rentals) affected by the pandemic.
Brussels said: “The Commission found that the scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the Cypriot economy in a period when the normal functioning of the tourism and package travel market is severely disturbed by the coronavirus outbreak.”
The Commission assessed the scheme under Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables it to approve State aid measures to remedy a serious impact to the economy of a Member State.
It said the Cyprus scheme is in line with the objectives pursued by the Commission Recommendation at making vouchers an attractive and reliable alternative to cash reimbursements.
“The public support will take the form of public guarantees which aim at covering vouchers (i.e. credit notes) issued by the beneficiaries to either consumers or organisers of package travels for cancelled travel packages or individual touristic services booked prior to 31 October 2020.”
Cyprus aims to support service providers in the tourism sector that are experiencing significant losses of revenue and liquidity shortages due to the coronavirus outbreak.
The key sector has been decimated by lockdowns, quarantine and other travel restrictions that Cyprus and other governments implemented to curb the pandemic.
Cyprus lost about 80% of its tourist arrivals last year which had a devastating effect on tourism income.