President of the Republic Nicos Anastasiades announced Friday measures to restart economy and support vulnerable groups, amidst the deep economic recession in Cyprus and following an agreement with the international lenders on a bailout programme.
The President announced the Government’s decision to build a natural gas liquefaction terminal in Cyprus. He said that the Ministry of Commerce, Industry and Tourism will prepare within 15 days a roadmap with suggestions on the management of Cyprus’ energy policy. Based on these suggestions, the Government will prepare a comprehensive action plan and the National Council will convene to collectively approve the National Energy Policy.
Anastasiades noted that on the 25th of March, when the Eurogroup decided on the bailout programme for Cyprus, a long period of instability and uncertainty ended, pointing out that what matters now is for everybody to act in concert.
“I know that any attempt to make measures imposed on us look nice would be a sign of weakness of realising the real problems faced by society, but more importantly, any such attempt would indicate lack of vision, courage and determination on the part of the Government and the state to lay the foundations for restarting the economy and reconstructing our country” President Anastasiades noted.
The government’s first package of measures, as announced by the President during a televised address, serves five key objectives: support vulnerable groups of the population, train unemployed youth and graduates, create new jobs, enhance development and encourage green development.
These measures are taken in difficult economic conditions, within tight timeframes and narrow budgetary frameworks, said the President, but stressed that the measures he announced are not the last ones as another package of measures will be announced in May on the financial sector, the services sector, technology and research, and other important sectors of the economy. In the meantime, he said, a second package of measures will follow on institutional changes and modernization of the state.
The President said that the loan agreement with the lenders has secured the ability to extend repayment of loans without any further increase in the debtors’ burden, adding that the Government is making serious efforts to find ways to reduce lending rates. The President asked those who face problems with the repaying of their loans to contact their banks to make the necessary restructuring, assuring that until this is completed no action will be taken against the debtors.
The President announced that by the end of May the Government will promote legislation for the appointment of a Bank Ombudsman with a mandate to ensure fair restructuring of loans.
In order to provide additional measures to protect debtors who are unable to meet their obligations, the Government will directly promote legislation which will protect the owners from expropriation of their commercial or residential properties. Through legislation, the bank and the debtor will be given the right to reach an agreement in order for the bank to purchase the property at the value of the loan and the owner to rent it for a specific period of time. The advantages, the President explained, are that the owner and debtor will not be homeless and he will be able to repurchase the said property at the end of the period, at the then value of the loan.
The President announced that the Government has decided to establish a Court of Arbitration that will examine the cases of bond holders who have been deceived and are not institutional investors and award compensation. A relevant bill will be tabled to the Parliament within the next few days so that the Court starts work by the end of June.
At the same time, he said that for the vulnerable groups there will be further reduction in electricity price, totaling 9,5%. It has also been decided to subsidize by 50% the cost of the installation of solar panels in residential units. Based on economic and social criteria, the Government expects that 2000 households will benefit during 2013.
On job creation, President Anastasiades noted that through extraordinary solidarity measures due to be approved by the Parliament, 800 hourly paid employees will get their jobs back, in addition to contract teachers, 300 graduates of military academies will be employed and 6000 unemployed will get a job in the tourist industry. This will cost the Government 21 million to subsidize up to 40% of their wages, whereas through a new project the Government will subsidize the wages of unemployed by 65%, to work with flexible terms. The project is expected to give a job to 1000 unemployed.
The President said that Cyprus’ two public universities will increase the number of positions available for new undergraduates by 135, for 2013, and will offer 235 positions to Cypriots to transfer from other universities abroad.
In the same framework the Government has decided for deductions of up to 25% on the taxable corporate income for every new worker hired within 2013 and at the same time encourage the shift toward the primary section of the economy, by allocating to unemployed land owned by the Government, the Church of Cyprus, and the University of Cyprus against a nominal rent.
Anastasiades announced that a pending project on youth entrepreneurship will be implemented to create 1000 new jobs and will cost the Government 10 million euro.
The President spoke of radical changes in government policy on benefits. He said that benefits will be granted to those who are really in need and that anyone who rejects at least twice a job offered by the Public Employment Service will not be allowed to receive state allowances.
He said that the subsidy scheme covering the needs of asylum seekers and other foreigners will be modified and the benefits will decrease significantly, whereas for their clothing and food needs they will be given coupons, instead of money. Asylum seekers and foreigners will be staying in places owned or rented by the state, and the rent will be paid directly to the owner of the said premises. They will be denied any state benefit if they reject a job offer.
On health policy, Anastasiades noted the Government’s decision to spend 6 million euro for the purchase of services from the private sector, to simultaneously reduce the burden of state hospital and strengthen the private ones. In addition, free medical care will be terminated for those who have contributions to the Social Insurance Fund for only three years, and those who owe to the taxman, excluding serious emergencies and patients under long-term therapies.
Measures to enhance development include, inter alia, reduction of the time needed to issue a building permit, an agreement between Republic of Cyprus and the British Sovereign Base Areas on the urban development of land within the limits of the British SBA, and raising building factors under certain conditions. Also the Government will grant licenses for casinos, extend the tourist season by two months and encourage, through incentives, implementation of projects for the construction of golf courts.
President Anastasiades said that an Authority to manage the exploitation of state property will be established.
He also announced that a mechanism to guarantee loans to viable small and medium size enterprises under favorable terms will be established as soon as possible, whereas the rent paid by businesses in industrial areas will be kept at current levels.
A project to reduce the cost of electricity by the use of solar panels, for commercial and industrial consumers, including public buildings, will be implemented. The Government will accelerate procedures to grant licenses to 24 companies for the installation of photovoltaic parks with a total capacity of 50 MW. President Anastasiades noted that by fully implementing projects for electricity production from solar energy Cyprus will save 53 million euro yearly and create 650 new jobs.
On Μarch 25 Eurozone Finance Ministers, known as the Eurogroup, decided on a €10 billion bailout for Cyprus coupled by a bail-in by uninsured depositors. The decision provided that Cyprus` second largest lender, the Cyprus Popular Bank, will be wound down, whereas Bank of Cyprus` uninsured deposits will take losses up to 60%
