Finance Minister Constantinos Petrides on Thursday announced a nine month moratorium on loan instalments in order to bolster households and businesses battered by the coronavirus crisis and stave off unemployment.
He said cabinet had approved two measures to help the economy weather an unprecedented storm.
“The battle we are waging will be judged by how successful we are in averting bankruptcies by improving liquidity and preventing unemployment,” he said.
The economy has practically ground to a halt as a result of sweeping measures introduced to contain the the epidemic.
At a press conference with Central Bank governor Constantinos Herodotou, the minister said that the crisis caused by the coronavirus epidemic was affecting 260,000 employees and more than 60,000 companies, putting tens of thousands of jobs at risk from bankruptcies.
“The aim is to subsidise the market, not the banks. The aim is to help the real economy.” Petrides said.
Effectively, the banks will channel this liquidity and the money will be used to pay wages and suppliers, he said.
He said that it was decided:
1. There will be a suspension by law and by decree of the repayment of loans and interest for nine months. This would cover companies, individuals and the self-employed who were up to date with their obligations and are affected by the crisis. The moratorium will be re-assessed after nine months.
2. The government will provide guarantees of up to €2b for new low interest loans, of which €1.75b for loans and €250m to subsidise part of the interest. The loans will be for periods of between three months and six years.
Herodotou said the moratorium will inject immediate liquidity into the market. The two schemes protect the banks he added.
Other measures are also being studied while a support package is being discussed with parties so that it can be approved by parliament tomorrow.
This story is being updated
