Cyprus  Government Throws a Lifeline (13.2.09)

In these times of economic gloom and doom, at least there was some good news last week from the Bank of Cyprus (BOC). According to the Financial Mirror, the country’s Central Bank has announced that it will offer up to €1.5 million in a package of measures which it hopes will boost the economy with lifelines to the tourism, real estate and construction sectors and to small and medium-sized businesses.

The bank will offer lower interest rates of 5% and longer loan terms (up to 45 years) to first-time property buyers. It will also help professionals by offering loans at 5.5% so that they can acquire premises more easily and small and medium-sized firms will be able to get access to working capital and reschedule loans if they are experiencing short-term problems in the current economic climate.

President Demetris Christofias also announced that the government will sign an agreement in March with the European Investment Bank in March to provide loans of around €300 million under favourable conditions  -  primarily to help small and medium size enterprises.

All these measures are part of the Cyprus government’s action plan to accelerate the growth of the local economy and keep unemployment down in the face of global economic downturn.  The tourism sector will receive around €51 million which will result in, among other things, a lowering of the high landing fees that are currently paid by airlines and a reduction in the VAT rate for overnight stays in hotels from 8% to 5%. The construction sector will benefit by more than €200 million and part of that will include special loan schemes for low and middle-income families.

President Christofias admitted that economic forecasts for 2009 were pretty grim but noted that the Cyprus economy will be less affected than many of the Eurozone countries. He also said that he expected the private sector to play its own role in combating the financial crisis and particularly called on banks to reduce borrowing rates.

We can only hope that the banks will take note of the President’s suggestions and make things easier for those who want to buy their own home in Cyprus.