An amount of €60 million. will be the "dowry" of the Cyprus Business Development Organization (KOAE), which will cover both the loans it will grant to businesses and its operating costs. The one-time grant will be granted in five installments.
This year, the state will pay the KOAE €1 million, in 2027 an amount of €10 million, in 2028 and 2029 an amount of €20 million, while in 2030 the last €9 million will be paid.
After all the installments are given, the Organization is planned to be self-financed. The operation of the organization will facilitate the access of micro and medium-sized enterprises, start-ups and the self-employed to finance, through loans, guarantees, grants, investment tools and advisory services.
During yesterday's debate in the parliamentary Finance Committee, the partial payment of the grant of €60 million. did not convince the MPs, who expressed strong reactions in relation to the viability of the Organization. The technocrats of the competent ministry assured that no additional sponsorship will be paid to the KOAE, beyond €60 million.
An allocation of €10 million has been included in the 2027 budget. for the cost of setting up the KOAE, which does not affect the expenditure ceilings of the Ministry of Finance. The Agency will have the possibility, subject to the approval of the Minister of Finance, to borrow funds from European and international financial institutions or EU banks.
It is recalled that the establishment of the KOAE and the appointment of the council are among the prerequisites of the Recovery Fund.
The maximum borrowing limit in the Board of Directors
The Board of Directors, per programming period, will propose to the competent authority the maximum borrowing limit of the KOAE, taking into account its financial viability, its equity and the obligations it undertakes. The CSD's borrowing ceiling will be approved by the competent authority.
The aim is for the Agency to gradually become self-financing.
By the end of August, the Ministry of Finance will proceed with the appointment of the council. Based on the suggestions of the parties, the first council will be transitional and its term will be for a period of 12 months, while along the way the next councils that will be appointed will go through a suitability check. It should be noted that the board of directors of the KOAE will proceed with the preparation of the budget of the Organization, which will be submitted to the Parliament.
The state estimates that in the first years of operation of the Organization it will have to be staffed with 12 to 15 people, at a cost of €1 million. per year.
State guarantee of up to 80% per loan
In relation to concerns about the fiscal cost of the Organization, according to the Ministry of Finance, this will consist of the initial capital of €60 million. and any borrowing of the Organization will be guaranteed by the state.
Also, the fiscal cost includes the cost of the guarantees that the KOAE may be called upon to pay due to non-payment by the borrowers, in the context of the guarantee tool.
According to the suggestions of the researchers for the design of the guarantee tool, the state will guarantee up to 80% per loan, with a maximum coverage rate of 25% of the total portfolio. The Agency may receive a counter-guarantee from the European Investment Fund to cover 70% of the losses that may occur.
By Friday, the relevant ministry will submit a new revised text of the bill. ALMA has already announced that its amendments will focus on strengthening control and accountability mechanisms and limiting the possibility of granting loans and financing to medium-sized enterprises. The bill will be put before the Plenary Session in a week, which will convene extraordinarily.
