Cyprus keen on speedy implementation of stimulus package

The government is keen on speedy implementation of its EUR 300 mln stimulus package, but property developers are sounding the alarm bells that a large chunk of the package, earmarked to build cheap housing will backfire.

Last week, the Government announced new additional measures to accelerate the growth rate of the local economy and to maintain unemployment at low rates. The measures will cost approximately EUR300 mln with EUR51 mln earmarked for tourism and EUR245 mln towards construction.

Finance Minister Charilaos Stavrakis said in an effort to ensure the procedures were not held thanks to bureaucratic red tape, Finance Ministry permanent secretary Michalis Lambrinos had been appointed project manager. He had been chosen for his experience in development projects and would ensure the project began as soon as possible, Stavrakis said.

Housing ghettos

Details were given regarding how a new housing loan plan in the region of EUR200 million would work. The loans would have zero interest rate for the first two years and would only apply to families with low and middle incomes fulfilling strict income criteria, Stavrakis said. The families would be allowed opt for an apartment or home of their choosing and would be given favourable terms for the duration of the loan.

Property developers countered that the state’s new stimulus package to boost the construction sector will force many young couples and low-income families into ‘government housing’ that will end up as ghettos.

They also said the stimulus also violated competition laws, giving the government a virtual monopoly on housing.

The EUR245 mln construction industry aid package includes EUR200 mln in housing loans, to be funneled through the Cyprus Land Development Corporation, which offers low interest rate loans to low-income families.

Financial Mirror, February 09, 2009

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