InsiderEconomyParties’ alternatives to state-guaranteed loans submitted by Monday

Parties’ alternatives to state-guaranteed loans submitted by Monday

Discussion before Friday’s House plenum on a government scheme to guarantee loans worth €2bn has been postponed since political parties are set to submit alternatives by lunchtime on Monday.

The parties which have expressed doubts over the bill’s effectiveness will essentially submit to the House Finance Committee Secretary alternative ways to channel the €2 billion liquidity into the market.

The guarantees bill involves the provision of state-backed low-interest loans worth €1.750bn to businesses, individuals and the self-employed so that they can manage the coronavirus fallout.

An additional €250m will be used to subsidise the interest rate. It also applies to individuals, the self-employed, and businesses.

Ruling Disy on Thursday joined opposition parties Akel and Diko in proposing the postponement of the bill’s debate. Disy leader Averof Neofytou said the government should proceed with lending to subsidise employees’ income and safeguard other government liabilities. He also proposed the extension of the one-off support package for employees and the self-employed as well as enhancing the liquidity of households and businesses through state guarantees.

Neophytou went a step further, suggesting the suspension of rent payments just like the way installments to banks took place. But even though the ruling party has put forward alternative proposals, it still expressed confidence in the government.

Meanwhile, Finance Minister Constantinos Petrides defended the guarantees bill before members of the House Finance Committee during a teleconference on Thursday.

Insiders told Phileleftheros the Minister disagreed with the alternative measures to be proposed by parties. In fact, he told MPs that, at this moment, the state cannot proceed with lending out the way they are suggesting.

He rang alarm bell over the country’s public debt sustainability to prove his point.

And he also pointed out that the state’s revenues have decreased by €100 million since March, with 80% of the Mediterranean island’s sources of income now being zapped.

He then clarified in a tweet that sufficient direct subsidy is not possible to anyone, noting that Germany, Austria, France, Finland, Ireland, Luxembourg, England, Poland, the Netherlands, Portugal, Scandinavia, Spain, Switzerland and Romania have proceeded with state assistance schemes to businesses through guaranteed loans.

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