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Financial Mirror (Cyprus) - - FRONT PAGE -

The coali­tion gov­ern­ment has pro­posed for­giv­ing up to half of nearly 40 bln euros in bad loans in­curred by small to medium-sized en­ter­prises (SMEs), to take some strain off the sec­tor ham­mered by a six-year re­ces­sion.

The move, which would be the big­gest re­struc­tur­ing of business debt owed to banks since the cri­sis erupted, would af­fect loans that have al­ready been writ­ten off as non per­form­ing (NPLs) by the banks them­selves.

The gov­ern­ment, which sub­mit­ted an amend­ment to a law to push through the pro­posal, said about 180,000 SMEs were el­i­gi­ble for a write-off of up to 50% of over­due debt to banks if they started mak­ing pay­ments again.

The amend­ment mainly tar­gets about 100,000 small and very small busi­nesses that owe an av­er­age of 45,000 euros each to the banks, the gov­ern­ment said.

“Th­ese are busi­nesses that have been badly hurt by the cri­sis and sur­vived,” out­go­ing de­vel­op­ment min­is­ter Nikos Den­dias told re­porters. “It’s our moral obli­ga­tion to do that for them.”

He said the troika of in­ter­na­tional lenders from the EU and IMF backed the move, although some de­tails still need to be worked out.

Bad loans in­clud­ing house­hold and business debt have hit about 80 bln euros - or nearly half of the 182 bln euro econ­omy - and the lenders have pushed the gov­ern­ment to im­prove cur­rent plans to re­solve the is­sue, fear­ing that ex­cess debt will hold back growth.

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