House to re­view crit­i­cal fore­clo­sures bill MMooss­c­coovvi­iccii:: ““YY­oouu mmuusstt ccoon­nt­ti­in­nu­uee wwi­it­thh pprrooggrraammmmee””

Financial Mirror (Cyprus) - - FRONT PAGE -

The House of Rep­re­sen­ta­tives will dis­cuss the fi­nal two pieces of leg­is­la­tion about fore­clo­sures and in­sol­ven­cies on Wed­nes­day, with a nar­row vote of ap­proval that could pave the way for a fi­nal re­view by in­ter­na­tional lenders and Cyprus tak­ing part in the Euro­pean Cen­tral Bank’s bond-buy­ing scheme known as quan­ti­ta­tive eas­ing (QE).

The fifth set of bills will be tabled at the joint House Fi­nance and In­te­rior Com­mit­tee meet­ings on Wed­nes­day morn­ing af­ter which it may be rushed to the ple­nary ses­sion on Thurs­day, just days be­fore the cur­rent stum­bling block of a sus­pen­sion of the re­main­ing bills im­posed by the op­po­si­tion ex­pires on March 17.

Pas­sage of the bills that reg­u­late fore­clo­sures of prop­er­ties mort­gaged to banks and deemed as non-per­form­ing due to the in­abil­ity of the own­ers to re­pay their loans, as well as the frame­work that se­cures the pri­mary home and al­lows guar­an­tors of loans some lee­way, has been de­layed for fear of low­in­come house­holds los­ing the roof over their heads.

Mat­ters have been made worse by the eco­nomic and bank­ing cri­sis of the past two yeas, as well as the rise in un­em­ploy­ment to 16%, with many bor­row­ers un­able to make pay­ments, let alone in­ter­est on pay­ments.

Rul­ing DISY’s 20 MPs are ex­pected to vote in favour of the bills, while for­mer ju­nior coali­tion part­ner DIKO’s eight MPs now also seem con­vinced that the new pack­age will safe­guard pri­mary homes of up to a cer­tain value. In the 56-seat House, this will be determined in a nar­row vote.

The op­po­si­tion com­mu­nist party AKEL and the smaller so­cial­ist EDEK, to­gether with the sin­gle-seat Euro­pean Party (Evroko) and the Greens, also want small bor­row­ers pro­tected from the in­sol­ven­cies.

This is a thorny is­sue with the Troika of lenders who bailed out Cyprus in a EUR 10 bln eco­nomic ad­just­ment pro­gramme that in­cludes stricter fis­cal pol­icy, a smaller af­ford­able gov­ern­ment ma­chine, pri­vati­sa­tion of util­i­ties and sale of state as­sets and gen­eral re­forms. The de­lay in the new bills has also held back pay­ments by the Euro­pean Com­mis­sion, the Euro­pean Cen­tral Bank and the In­ter­na­tional Mon­e­tary Fund of about EUR 450 mln in funds, as a pos­i­tive re­view has not yet been se­cured. House would pass the five bills per­tain­ing to the in­sol­vency frame­work and that it would al­low for the im­ple­men­ta­tion of a fore­clo­sures leg­is­la­tion in the com­ing weeks.

He said that on Mon­day he would brief his col­leagues at the Eu­rogroup that all five bills re­lat­ing to the in­sol­vency frame­work are now be­fore Par­lia­ment and that dis­cus­sions on most of them are at an ad­vanced stage.

In state­ments af­ter the Eu­rogroup meet­ing Com­mis­sioner for Eco­nomic and Fi­nan­cial Af­fairs Pierre Moscovici said that Cyprus needs con­tinue with im­ple­men­ta­tion of the fore­clo­sures law with­out fur­ther de­lay, as well as the eco­nomic ad­just­ment pro­gramme.

He stressed that the im­ple­men­ta­tion of the fore­clo­sures bill is a pre­req­ui­site for the pos­i­tive re­view of the Cyprus eco­nomic ad­just­ment pro­gramme and the dis­burse­ment of the re­main­ing tranches from the bailout funds.

Moscovici said that Cyprus has made very im­por­tant and im­pres­sive steps to­wards the cre­ation of new job po­si­tions and added that it would be re­ally un­for­tu­nate if there is a new de­lay of the progress that has been achieved due to the fore­clo­sures law.

Gov­ern­ment Spokesman Ni­cos Christodoulides also ex­pressed his op­ti­mism that the House will pass the in­sol­vency frame­work.

He said that this will pave the way for the im­ple­men­ta­tion of the leg­is­la­tion on fore­clo­sures a prior ac­tion ne­ces­si­tated so that Cyprus’ 5th re­view by the in­ter­na­tional lenders can be com­pleted and the coun­try can con­tinue to re­ceive tranches of its bailout which have been suspended since De­cem­ber. into law in Septem­ber but had voted to sus­pend its im­ple­men­ta­tion on De­cem­ber 18, un­til the in­sol­vency frame­work, meant to cre­ate a safety net for peo­ple af­fected by the cri­sis, could also be im­ple­mented.

The Coun­cil of Min­is­ters ap­proved last week the fi­nal pair of the long-out­stand­ing bills. The first of two pieces of leg­is­la­tion refers to in­sol­ven­cies and the frame­work for guar­an­tors, and the other reg­u­lates the auc­tions and trans­fers in the case of fore­clo­sures.

“We hope that the two (bills) will se­cure the nec­es­sary ma­jor­ity in par­lia­ment,” Christodoulides said, re­fer­ring to the reser­va­tions that cen­tre-right DIKO had ex­pressed for the bills to en­sure pro­tec­tion of pri­mary homes in or­der for its eight MPs to vote for the bill. The rul­ing Demo­cratic Rally (DISY) has 20 votes in the 56-seat par­lia­ment.

Christodoulides added that the bill on in­sol­ven­cies is “fair” to the thou­sands of home-own­ers af­fected, adding that “this was the gov­ern­ment’s strat­egy from the out­set”.

Asked if the fi­nal bills en­joy the ap­proval of the Troika of­fi­cials, he said that “for some time now we have been en­gaged in talks both with the par­lia­men­tary par­ties and the in­sti­tu­tions (Troika), so that we can con­clude on a re­sult that will help re­solve the prob­lem and at the same time se­cure all those who are in a needy state.”

Three lead­ing bankers, the chair­man of the na­tion­alised and re­cap­i­talised Co­op­er­a­tive Cen­tral Bank, and the chief ex­ec­u­tives of Bank of Cyprus and Hel­lenic Bank have fre­quently re­it­er­ated their po­si­tions that the banks will not pur­sue to grab prop­er­ties and be­come re­al­tor com­pa­nies. Quite the con­trary, they in­sist that the fore­clo­sures pack­age of bills will help them re­cover se­cu­ri­ties from large bor­row­ers who have avail­able funds but refuse to cut down their non-per­form­ing loans, with NPLs now ac­count­ing for more than 50% of the is­land’s to­tal loan­book.

The first of two bills ap­proved by the Cabi­net last Fri­day re­lates to the in­sol­vency of nat­u­ral per­sons and reg­u­lates the re­struc­tur­ing of loans to en­sure a smooth re­pay­ment pro­gramme and se­cure the pri­mary home from fore­clo­sure, while up to EUR 15,000 of debts may be writ­ten off where the bor­rower can prove in­suf­fi­cient in­come or funds to re­pay the loans.

The sec­ond bill reg­u­lates the trans­fer and mort­gage of prop­er­ties and de­ter­mines the pro­ce­dures for public auc­tions.

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