Two prior ac­tions will re­lease next tranche of Troika bailout funds

Financial Mirror (Cyprus) - - FRONT PAGE -

Con­clud­ing their week-long visit to Cyprus on Fri­day, hav­ing met Cen­tral Bank Gover­nor Chrys­talla Ge­orghadji and Fi­nance Min­istry tech­nocrats, the heads of the Troika of lenders’ mission to Cyprus are fi­nal­is­ing their sixth re­view of the is­land’s eco­nomic ad­just­ment pro­gramme, aka the EUR 10 bln bailout pack­age that in­cludes re­forms and ways to keep public spend­ing in check.

Two ‘prior ac­tions’ that need to be im­ple­mented by the Cyprus gov­ern­ment, in or­der to re­lease the next tranche of the bailout money, are laws reg­u­lat­ing the sale of loan and mort­gage port­fo­lios to in­vest­ment funds, and the ‘Hasikos plan’ that will ab­solve bor­row­ers who have re­paid their loans, but have not se­cured ti­tle deeds as th­ese may have been re­mort­gaged by de­vel­op­ers.

The is­sue of sale of loan se­cu­ri­ti­sa­tion and mort­gages to non-fi­nan­cial in­sti­tu­tions caused a furore among po­lit­i­cal par­ties that feared that mort­gaged Cyprus prop­erty could end up in for­eign hands, in par­tic­u­lar Turkey. To that end, the gov­ern­ment said this week that the Troika mission chiefs seemed pos­i­tive to a pro­viso that any port­fo­lio sold to for­eign in­sti­tu­tions be cleared by the Cen­tral Bank first.

The meet­ing with Ge­orghadji on Fri­day, who missed a Thurs­day meet­ing as she was in Frank­furt for the ECB Coun­cil, was to agree to the re­vised Mem­o­ran­dum of Un­der­stand­ing con­cern­ing the fi­nan­cial sec­tor.

On Thurs­day, the Troika heads had held a lengthy meet­ing with Fi­nance Min­is­ter Har­ris Ge­or­giades and Un­der­sec­re­tary to the Pres­i­dent for Public Re­form Con­stanti­nos Petrides, cov­er­ing all is­sues con­cern­ing the fis­cal sec­tor and the struc­tural re­forms, af­ter which it was re­ported that the loan se­cu­ri­ti­sa­tion is­sue had been post­poned by three months to the end of July to al­low time for dia­logue.

The re­vised MoU in­cludes fur­ther public sec­tor re­forms and gov­ern­ment pro­pos­als for the pro­mo­tion and mo­bil­ity of civil ser­vants, which will be put to the Cabi­net for ap­proval by the end of June. Gov­ern­ment pro­pos­als for re­form of the civil ser­vice in­clude en­ergy, tourism, pri­vati­sa­tion of semigov­ern­men­tal or­gan­i­sa­tions and im­ple­men­ta­tion of the Na­tional Health Scheme.

More­over, the bud­getary and macroe­co­nomic com­mit­ments of Cyprus for 2015 were also agreed dur­ing the dis­cus­sions and the as­sess­ment of the Euro­pean Com­mis­sion for 0.5% re­ces­sion in 2015 was adopted, de­spite the fact that the Fi­nance Min­istry ex­pects mar­ginal growth. At the same time the aim for pri­mary sur­plus was brought for­ward a year, to 2015, from 2016.

The tar­get for the bud­get deficit in 2015 was set at 1.5% of GDP, while the tar­get for the pri­mary sur­plus was set at 1.5% of GDP.

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