House Finance Committee chair and DIKO deputy leader Christiana Erotokritou

House to vote on state guarantees a year late

1 min read

Deputies will be using Thursday’s final session before dissolving for fresh elections next month to pass a bill that defines and regulates state guarantees worth €1 bln for coronavirus-hit businesses.

The bill provides state guarantees with low interest to cover loans given by commercial banks to businesses and self-employed and is expected to be voted through in the final plenary before the parliamentary elections on May 30.

The package comes almost a year late as MPs could not reach consensus on the specifics of the scheme.

It was initially tabled last May and rejected, only to return after the government conceded to demands for amendments from minor opposition parties in a bid to approve the 2021 budget which was passed with somewhat delay in January this year.

“Overcoming all the substantive and procedural obstacles that were put before us, the finance committee (on Wednesday), in an extraordinary session, a few hours before the last plenary session, resolved the heavy bond of state guarantees and leads the bill to the plenary vote,” said House Finance Committee chair Christiana Erotokritou.

Initially, Finance Minister Constantinos Petrides had tabled a scheme which would provide guarantees to loans worth up to €2 bln to cash-strapped businesses hit by the coronavirus crisis.

However, MPs disagreed with the initial package, expressing concerns over who should monitor the procedures fearing that banks may direct the cash towards larger businesses, leaving smaller companies exposed.


Revised after budget deal

The bill was revised by the Finance Ministry, following the budget deal, lowering the sums to be guaranteed and regulating the percentage of money for companies according to their size.

The government tabled another bill towards the end of 2020 which provided €300 mln for small enterprises and the remaining €700 mln for the rest of the businesses without any other conditions.

According to Erotokritou, the distribution of state guarantees has changed after further consultations with the government, with €300 mln being distributed to small enterprises and the self-employed, €550 mln to SMEs and €150 mln to large enterprises, while there are also criteria based on the number of employees and turnover.

Government spokesman Kyriacos Koushos on Thursday called on the parties to vote through the bills.

“The economy and small and medium-sized enterprises are in need of liquidity and the only way, at the moment, to provide this liquidity is through the plan drawn up by the government and the bill submitted to the House of Representatives,” said Koushos.

Government guarantees to banks amount to €1 bln, with the risk being shared between the state which assumes 70%, and banks that assume 30% of the risk in the case of borrowers defaulting on their debt.