The escalation of the COVID-19 pandemic and the emergency situation created in the public health sector, which severely harms the citizens and the wider society, has led to concussions in the global and national economy.
In this regard, the adoption of measures has proved necessary to address and reduce its impacts on small and medium enterprises and citizens, to avoid the irreversible effects on the economy and the sustainability of the financial system.
The House of Representatives on 29/03/20 proceeded with the adoption of the so called “Emergency Measures taken by Financial Organizations and Supervisory Authorities Law of 2020” (Law 3 (I) / 2020).
The aforementioned law authorized the Council of Ministers of Cyprus to take emergency measures in order to safeguard the financial stability of the Republic of Cyprus. Therefore, the Minister of Finance, exercising the powers provided to him under Article 5 of the aforementioned Law, issued on 30/03/2020 a Decree (135/2020) which provides the following:
- the obligation to pay loan installments, including interest deriving from the credit facilities granted and/or purchased and/or managed by financial institutions, is suspended for individuals, public law entities, independent employees and companies (hereinafter the beneficiaries).
- the Decree covers the loan installments and interest on loans and credit cards and the interest on overdraft accounts issued by financial institutions.
- the suspension of the obligation of payment of installments covers beneficiaries who did not have any delay in the repayment of their instalments for more than 30 days from the date provided for by the existing contractual obligations on 29 February 2020.
- the above measures are valid from the 30th of March, 2020 until the 31st of December 2020.
- the suspension of installments and interest shall apply from the date of issuance of the Decree, provided that the beneficiaries inform in writing the financial institutions and send the said form by post, or by e-mail or fax.
- upon completion of the form, the borrower declares his/her willingness for suspension of installments and interest for all of his/her loans. In case the borrower does not wish the suspension of installments and interest for a specific loan, they shall explicitly state that in the relevant form.
- the terms of the existing loan agreements (other than the repayment terms) as well as all relevant collaterals continue to apply.
- non-repayment of installments during the period of suspension does not constitute a breach of contractual terms.
- the payment of installments and interest restarts with the expiration date of the Decree and the payment period is considered to be automatically extended for the required period.