The net financial impact of the support package approved by the cabinet on Sunday will cost €450m, while another €250m will be aimed at boosting business liquidity over the next two months, Finance Minister Constantinos Petrides announced on Sunday.
Speaking after the extraordinary cabinet meeting, Petrides said the Cyprus economy, like all the eurozone economies, could not remain unaffected by the repercussions of the coronavirus. “The magnitude of the consequences of this unprecedented and unexpected crisis cannot be foreseen at this time while the situation is developing,” he said.
The new measures will have serious financial implications he added.
The new measures will have serious financial implications he added.
The minister underlined that the economy was experiencing the most significant shock waves and the government had to use all the tools it had to get through the coming months.
The aim is to “provide an effective and a strong social safety net for employees, to support the resilience of our businesses and to strengthen our health system”.
The minister said that among the measures will be a €100m boost in the health sector to combat the pandemic if needed, which will include the employment of additional medical, nursing and support staff.
The minister said that among the measures will be a €100m boost in the health sector to combat the pandemic if needed, which will include the employment of additional medical, nursing and support staff.
Petrides said that the additional contribution to Gesy scheduled to start March 31 by employers, employees and the state will be postponed for two months but the timeline of the second phase of the Gesy will not be affected.
He further referred to the temporary suspension of VAT payments to provide liquidity to businesses, adding that the measure concerns companies whose turnover was less than 1 million euros, according to the tax declarations submitted in 2019 and businesses whose turnover dropped by more than 25 per cent, without imposing any charges.
There will be arrangements for VAT to be gradually paid off until November 11, the minister said, adding that this measure is expected to boost liquidity by around 240 million euros.
Petrides also referred to the temporary reduction of VAT from 19 per cent to 17 per cent over a two-month period and from 9 per cent to 7 per cent over a three-and-a-half-month period immediately after the relevant legislation is adopted to strengthen the purchasing power of the citizens. The cost will be 70 million euros.
The overseas students’ grant of 750 euros for those who stay abroad for the Easter break will cost 15 million euros.
Tax statements can be submitted until the end of May instead of end of March, said the minister.
Eleven million euros has also been earmarked for the implementation of tourism support from June to September 2020, in cooperation with airlines and tour operators as well and actions to increase the number of tourists during the period October 2020 – March 2021.
Regarding the banking sector, the minister said that the ECB and the Central Bank have already studied measures to support bank lending, noting that under the new measures, Cypriot financial institutions will be able to obtain liquidity from the Eurosystem on very favourable terms.
“The measures decided by the ECB concern the release of capital stocks, which for Cyprus` systemic banks are estimated at over 1.3 billion euros,” he said.
He further referred to the temporary suspension of VAT payments to provide liquidity to businesses, adding that the measure concerns companies whose turnover was less than 1 million euros, according to the tax declarations submitted in 2019 and businesses whose turnover dropped by more than 25 per cent, without imposing any charges.
There will be arrangements for VAT to be gradually paid off until November 11, the minister said, adding that this measure is expected to boost liquidity by around 240 million euros.
Petrides also referred to the temporary reduction of VAT from 19 per cent to 17 per cent over a two-month period and from 9 per cent to 7 per cent over a three-and-a-half-month period immediately after the relevant legislation is adopted to strengthen the purchasing power of the citizens. The cost will be 70 million euros.
The overseas students’ grant of 750 euros for those who stay abroad for the Easter break will cost 15 million euros.
Tax statements can be submitted until the end of May instead of end of March, said the minister.
Eleven million euros has also been earmarked for the implementation of tourism support from June to September 2020, in cooperation with airlines and tour operators as well and actions to increase the number of tourists during the period October 2020 – March 2021.
Regarding the banking sector, the minister said that the ECB and the Central Bank have already studied measures to support bank lending, noting that under the new measures, Cypriot financial institutions will be able to obtain liquidity from the Eurosystem on very favourable terms.
“The measures decided by the ECB concern the release of capital stocks, which for Cyprus` systemic banks are estimated at over 1.3 billion euros,” he said.
