Further to a request from Cyprus on 6 August 2020, on 25 September 2020, the Council granted financial assistance to Cyprus in the form of a loan amounting to a maximum of EUR 479 070 000. with a maximum average maturity of 15 years, with a view to complementing Cyprus’s national efforts to address the impact of the COVID-19 outbreak and respond to the socioeconomic consequences of that outbreak for workers and the self-employed.
(2)
The loan was to be used by Cyprus to finance the short-time work schemes, similar measures and health-related measures referred to in Article 3 of Council Implementing Decision (EU) 2020/1344 (2).
(3)
The COVID-19 outbreak continues to immobilise a substantial part of the labour force in Cyprus. This has led to a sudden and severe increase in public expenditure in Cyprus in respect of the measures referred to in Article 3, points (a) to (e), (g) and (h), of Implementing Decision (EU) 2020/1344.
(4)
The COVID-19 outbreak and the extraordinary measures implemented by Cyprus in 2020 and 2021 to contain the outbreak and its socioeconomic and health-related impact have had and continue to have a dramatic impact on public finances. According to the Commission’s 2020 autumn forecast, Cyprus was expected to have a general government deficit and debt of 6,1 % and 112,6 % of gross domestic product (GDP) respectively by the end of 2020. In 2021, Cyprus’s general government deficit and debt are forecast to narrow to 2,3 % and 108,2 % of GDP respectively. According to the Commission’s 2021 winter interim forecast, Cyprus’s GDP is projected to increase by 3,2 % in 2021.
(5)
On 10 March 2021, Cyprus requested further financial assistance from the Union of EUR 124 700 000, with a view to continuing to complement its national efforts undertaken in 2020 and 2021 to address the impact of the COVID-19 outbreak and respond to the socioeconomic consequences of that outbreak for workers and the self-employed. In particular it concerns the measures set out in recitals (6) to (13).
(6)
‘Law 27(I)/2020’ (3), ‘Law 49(I)/2020’ (4), ‘Law 140(I)/2020’ (5) and ‘Law 36(I)2021’ (6) have been the basis for the introduction of a number of monthly regulatory administrative acts (7), outlining measures to address the impact of the COVID-19 outbreak. On the basis of those laws, the authorities have introduced a ‘special leave scheme’, as referred to in Article 3, point (a), of Implementing Decision (EU) 2020/1344, which provides wage compensation to parents working in the private sector who have children up to the age of 15 or children of any age with disabilities. That special leave scheme can be considered to be a similar measure to short-time work schemes, as referred to in Regulation (EU) 2020/672, as it provides income support to employees and helps preserve employment by preventing parents, who have to look after their children while schools are closed, from needing to terminate the employment relationship. The measure was initially in force for the period from February 2020 to June 2020 and was subsequently extended to cover the period from January 2021 to July 2021.
(7)
Furthermore, ‘Law 27(I)/2020’, ‘Law 49(I)/2020’, ‘Law 140(I)/2020’ and ‘Law 36(I)2021’ and a number of monthly regulatory administrative acts (8) have been the basis for a ‘scheme supporting companies that have had to completely suspend operations’, as referred to in Article 3, point (b), of Implementing Decision (EU) 2020/1344. That scheme provides wage compensation to 97 % of the employees of the businesses forced to suspend their operations, conditional on employment retention. The compensation covers 60 % of the employee’s salary or 60 % of the employee’s social insurance units earned in 2018 (2019 for the period from July 2020 to August 2020), whichever is the greater. The compensation ranges between a maximum of EUR 1 214 and a minimum of EUR 360 per month. The measure was initially in force for the period from March 2020 to August 2020 and was subsequently extended to cover the period from September 2020 to July 2021.
(8)
Moreover, ‘Law 27(I)/2020’, ‘Law 49(I)/2020’, ‘Law 140(I)/2020’ and ‘Law 36(I)2021’ and a number of monthly regulatory administrative acts (9) have been the basis for the ‘scheme supporting companies for partial suspension of operations’, as referred to in Article 3, point (b), of Implementing Decision (EU) 2020/1344. That scheme provides wage compensation to the employees of businesses experiencing a decline in turnover due to the COVID-19 crisis, conditional on employment retention. The compensation covers 60 % of the employee’s salary or 60 % of the employee’s social insurance units earned in 2018, whichever is the greater. The compensation ranges between a maximum of EUR 1 214 and a minimum of EUR 360 per month. The measure was initially in force for the period from March 2020 to June 2020 and was subsequently extended to cover the period from January 2021 to July 2021.
(9)
‘Law 27(I)/2020’, ‘Law 49(I)/2020, ‘Law 140(I)/2020’ and ‘Law 36(I)2021’ and a number of regulatory administrative acts (10) have been the basis for the ‘special scheme for the self-employed’, as referred to in Article 3, point (c), of Implementing Decision (EU) 2020/1344. That scheme provides compensation to the self-employed who cannot exercise any activity according to the decree of the Minister of Health or a decision of the Council of Ministers. The measure was initially in force for the period from March 2020 to June 2020 and was subsequently extended to cover the period from July 2020 to July 2021.
(10)
‘Law 27(I)/2020’, ‘Law 49(I)/2020’, ‘Law 140(I)/2020’ and ‘Law 36(I)2021’ and a number of regulatory administrative acts (11) have been the basis for the ‘special scheme for hotel units and tourist accommodation’, as referred to in Article 3, point (d), of Implementing Decision (EU) 2020/1344. That scheme provides wage compensation to support employees in the hotel industry and other businesses providing tourist accommodation whose employer has fully suspended operations or experienced a decline in turnover of more than 40 %. Participation in the scheme is conditional on employment retention. The measure was initially in force for the period from June 2020 to October 2020 and was subsequently extended to cover the period from November 2020 to July 2021.
(11)
‘Law 27(I)/2020’, ‘Law 49(I)/2020’, ‘Law 140(I)/2020’ and ‘Law 36(I)2021’ and a number of regulatory administrative acts (12) have been the basis for the ‘special scheme to support businesses related to the tourism industry or affected by tourism or associated with businesses that are subject to mandatory total suspension’, as referred to in Article 3, point (e), of Implementing Decision (EU) 2020/1344. That scheme provides wage compensation to the employees in the hotel industry and other businesses providing tourist accommodation that have fully suspended operations or experienced a decline in turnover of more than 40 % as opposed to 55 % under the original scheme, conditional on employment retention. The measure was initially in force for the period from June 2020 to August 2020 and was extended and amended to cover the period from September 2020 to July 2021.
(12)
Moreover, the ‘subsidisation scheme’ set by ‘Supplementary budget, Temporary framework for State aid measures to support the economy in the current COVID-19 outbreak’, as referred to in Article 3, point (g), of Implementing Decision (EU) 2020/1344, introduced subsidies for very small and small enterprises and the self-employed who employ up to 50 employees. Only the part of expenditure related to the support of the self-employed and one-person companies has been requested. Those subsidies provide a lump sum grant to support operating expenses of small enterprises and the self-employed. The amounts of the lump sum grants have been reviewed for various categories of enterprises based on the number of employees. In addition, grants have been agreed for enterprises that suspended their operations since March 2020, with an amount of EUR 10 000 for up to 9 employees and EUR 15 000 for more than 9 employees. The subsidisation scheme can be considered to be a similar measure to short-time work schemes, as referred to in Regulation (EU) 2020/672, as it aims to protect the self-employed or similar categories of workers from reduction or loss of income. The measure was initially in force for the period from April 2020 to May 2020 and was extended and amended for November 2020.
(13)
Cyprus also further extended a health-related measure to address the COVID-19 crisis provided for by ‘Law 27(I)/2020’, ‘Law 49(I)/2020’, ‘Law 140(I)/2020’ and ‘Law 36(I)2021’ and by regulatory administrative acts (13). In particular, the ‘sickness benefit scheme’, as referred to in Article 3, point (h), of Implementing Decision (EU) 2020/1344, provides wage compensation to employees of the private sector and to the self-employed, on the condition that they are either classified as vulnerable individuals according to a list published by the Ministry of Health, placed in quarantine by the authorities, or infected by COVID-19. The measure was initially in force for the period from March 2020 to June 2020 and was extended to cover the period from November 2020 to July 2021.
(14)
Cyprus fulfils the conditions for requesting financial assistance set out in Article 3 of Regulation (EU) 2020/672. Cyprus has provided the Commission with appropriate evidence that the actual and planned public expenditure has increased by EUR 742 040 000 as of 1 February 2020 due to the national measures taken to address the socioeconomic effects of the COVID-19 outbreak. This constitutes a sudden and severe increase because it is related to an extension of existing national measures directly related to short-time work schemes and similar measures that cover a significant proportion of undertakings and of the labour force in Cyprus. Cyprus intends to finance EUR 138 270 000 of the increased amount of expenditure through Union funds.
(15)
The Commission has consulted Cyprus and verified the sudden and severe increase in the actual and planned public expenditure directly related to short-time work schemes and similar measures, as well as the recourse to relevant health-related measures related to the COVID-19 outbreak, referred to in Cyprus’s request of 10 March 2021, in accordance with Article 6 of Regulation (EU) 2020/672.
(16)
The health-related measure, as referred to in Cyprus’s request of 10 March 2021 and in recital (13), amounts to EUR 440 000.
(17)
Financial assistance should therefore be provided with a view to helping Cyprus to address the socioeconomic effects of the severe economic disturbance caused by the COVID-19 outbreak. The Commission should take the decisions concerning maturities, size and release of instalments and tranches in close cooperation with national authorities
(18)
Cyprus and the Commission should take this Decision into account in the loan agreement referred to in Article 8(2) of Regulation (EU) 2020/672.
(19)
This Decision should be without prejudice to the outcome of any procedures relating to distortions of the operation of the internal market that may be undertaken, in particular pursuant to Articles 107 and 108 of the Treaty. It does not override the requirement for Member States to notify instances of potential State aid to the Commission under Article 108 of the Treaty.
(20)
Cyprus should inform the Commission on a regular basis of the implementation of the planned public expenditure, in order to enable the Commission to assess the extent to which Cyprus has implemented that expenditure.
(21)
The decision to provide financial assistance has been reached taking into account existing and expected needs of Cyprus, as well as requests for financial assistance pursuant to Regulation (EU) 2020/672 already submitted or planned to be submitted by other Member States, while applying the principles of equal treatment, solidarity, proportionality and transparency,
