The recommendation has been submitted to the Finance Ministry for assessment.
The Council said the fund could be set up with government money but later attract resources from EU funds and other institutions such as the European Investment Bank, the Juncker plan as well as private investors.
“We have seen the weakness of SMEs to obtain funding apart from commercial banks,” Takis Clerides, the Council chairman and former Finance Minister told a press conference.
“The Fund could be initially funded by many institutions including the government and European funds but at a later stage by other private organisations which would secure a return either on the capital provided to a company or on the investment provided to the Fund,” Clerides added.
He recommended a campaign aiming to strengthen SMEs financial education which would help in promoting the equity fund, assisting SMEs to obtain financing in general.
Council member, Andreas Assiotis said there was a general problem of businesses securing funding from commercial banks.
Assiotis said: “Alternative sources of funding are needed in the sense that someone, the state, international investors such as the European Commission via the Juncker Plan or the InvestEU to fund these companies by providing equity funding.”
“Companies are thirsty not for bank financing but equity,” he added.
Clerides said that the Fund could begin operations with €10-€20 million provided by the state, noting that the fund could grow quickly with various EU funding.
He said the fund should be managed by private experts with the state participating on the board only as a supervisor and not as administrator, noting that a fund manager could handle it.
Clerides said the Fund could attract resources via the Cyprus Investment Scheme, which attracts foreign investors who wish to obtain Cypriot citizenship.
In its recommendation the council said priority should be given to start-ups, investments that promote innovation, technological upgrade and to companies focusing on exports and the development of new fields.
The Council is preparing recommendations on boosting the agricultural sectors contribution to the GDP as well as modernising Cyprus’ tax regime, unchanged since 2003.
“We have reached a final stage regarding our recommendations which are being drafted and they are expected to be ready in September.”
Clerides added the proposals are not limited to increasing or reducing tax rates but cover other issues such as providing incentives to corporations aiming at enhancing the competitiveness of the economy.
Source: Financial Mirror
