Cyprus will set up a guarantee fund for Small and Medium Size Enterprises with total funds that can reach up to 400 million euro, European Investment Bank (EIB) Vice President Plutarchos Sakellaris has said.
In his last visit to Cyprus as EIB Vice President, Sakellaris was received on Tuesday by President Demetris Christofias, who criticized Cypriot commercial banks for not utilizing correctly previous loans by EIB dedicated for SMEs.
Speaking during the meeting, Christofias expressed his gratitude to the EIB and Sakellaris for the financial assistance given to Cyprus to promote growth in the current adverse financial conditions.
Recalling that the EIB has provided Cyprus with loans worth over 1 billion in the past four years, the President said such past loans were not utilized correctly by the banks.
In statements following the meeting, Sakellaris said the EIB is examining a new instrument for Cyprus, namely a guarantee fund for Small and Medium Size Enterprises.
“We hope that the (guarantee fund will be in place) by autumn. The mechanism will have guarantee funds between 50 or 100 million euro but with the leverage it will be able to provide much more in loans to the SMEs,” he said, responding to questions.
Sakellaris did not reveal the size of the interest rate, noting that the EIB provides member-states with loan interest rates, as it can receive funding from international capital markets with low rates due to its AAA rating.
It is estimated that the mechanism can increase its guarantee funds up to 400 million euro. The long-term loan will have a maturity of ten to twelve years with an estimated rate in the region of 2,5%.