InsiderEconomyCabinet approves €250 mln supplementary budget to deal with pandemic

Cabinet approves €250 mln supplementary budget to deal with pandemic

The Cabinet decided on Wednesday to approve a supplementary budget of €250 mln to cover needs arising from the handling of the pandemic.

Speaking after the Council of Ministers, Finance Minister Constantinos Petrides said that the decision was taken “despite the fact that €150 mln were committed in the 2021 budget for emergency situations arising from the handling of the pandemic.”

The supplementary budget of €250 mln will cover employment support schemes and schemes for businesses and the unemployed, worth €140 mln, which will be implemented by the Ministry of Labour until May 2021.

Moreover, the budget will also cover a spending of €60 mln for the purchase of vaccines for COVID-19 and antigen rapid tests, as well as consumables, medical supplies and services to support the Ministry of Health.

Another €50 mln will be allocated to dealing with various other emergencies that may arise within this year, in relation to the pandemic.

The proposed supplementary budget’s impact on the fiscal balance is estimated at 1.2% of GDP, Petrides added.

He said moreover that the Cabinet approved a draft bill concerning the provision of government guarantees to credit institutions, for lending purposes to businesses and the self-employed affected by COVID-19. The Minister said that a number of changes took place in relation to a previous plan, submitted by the government, after consultations with political parties.

The draft bill itself stipulates that €300 million of guarantees will be allocated for new loans to very small enterprises and the self-employed, while another €700 million will be allocated for new loans to small, medium and large enterprises, Petrides explained.

Government guarantees will be granted until December 31, 2021 instead of June 30, 2021 the previous draft bill provided for.

The Treasury of the Republic of Cyprus will submit a report every two months, to monitor and brief the Minister of Finance on the progress of granting government guarantees. The Minister will then brief the Parliamentary Committee on Finance on the Treasury’s findings every three months.

Petrides said that government guarantees of €1 bln will lead to increased liquidity in the economy, worth at least €1.43 bln.

Speaking at the Presidential Palace following a Cabinet session, Minister of Labour Zeta Emilianidou said that the Council of Ministers decided on Wednesday to approve the extension of employment support schemes until June 2021.

It is very important that our schemes will continue to support employment, with particular emphasis on hotels and businesses affected by the situation in tourism, the Minister noted.

She expressed, moreover content about the European Commission’s decision to give the “green light” to Cyprus’ schemes, approving an additional financing of €125 mln, with the total financing assistance reaching €604 mln.

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