Bailout pro­gramme on track, no new mea­sures, NPLs a con­cern

Financial Mirror (Cyprus) - - FRONT PAGE -

Of­fi­cials from the Troika of in­ter­na­tional lenders said that Cyprus was on track with its eco­nomic ad­just­ment pro­gramme fol­low­ing a ?10 bln bailout plan in 2013, and that no new fis­cal mea­sures were needed, but that some is­sues, such as pri­vati­sa­tion and the ex­tremely high lev­els of non-per­form­ing loans were still a con­cern.

Se­nior of­fi­cials from the Euro­pean Com­mis­sion said upon com­plet­ing their sev­enth as­sess­ment of the Cyprus pro­gramme on Fri­day that the re­form agenda re­mains the same and no new mea­sures are re­quired, un­less there is a clear need for them.

The Cyprus gov­ern­ment hopes to be in a po­si­tion to exit the pro­gramme in March 2016, three years af­ter it was in­tro­duced, and pos­si­bly even record a sur­plus by not util­is­ing all the funds al­lo­cated by the EC, the ECB and the IMF.

The Troika del­e­gates stressed the needs to re­solve the NPLs prob­lem, with the loans out­stand­ing for over 90-days and not ser­viced for six month now cor­re­spond­ing to just over 50% of the bank­ing sys­tem’s loan­book.

They also said that the state mech­a­nism han­dling these ‘bad loans’ as well as the banks ought to speed up their pro­cesses, as this will also help re­lieve thou­sands of home­own­ers who have re­paid their mort­gages but still do not have ti­tle deeds, as these are de­posited by de­vel­op­ers as guar­an­tees for other un­re­lated projects.

Cyprus lost six months of im­ple­ment­ing the bailout pro­gramme af­ter the gov­ern­ment dragged its feet on crit­i­cal fore­clo­sures and in­sol­ven­cies laws from last Oc­to­ber, while par­lia­ment de­layed their pas­sage on a pop­ulist plat­form.

As re­gard­ing pri­vati­sa­tions and public ad­min­is­tra­tion re­forms, the Troika of­fi­cials said that “progress is still be­ing made but there is the need to in­crease the pace of re­forms”. .

“We see that Cyprus is emerg­ing out of re­ces­sion, growth is timidly on the up,” a se­nior EC source said.

The Troika has now set three prior ac­tions for the dis­burse­ment of the next tranche of ?500 mln of aid.

These in­clude the adop­tion of the bill on the is­suance of ti­tle deeds of ex­posed bor­row­ers, the ap­proval by the Cab­i­net of the bills on the civil ser­vice re­form and the es­tab­lish­ment of a new com­pany un­der the pri­vati­sa­tion process of state-owned telecom­mu­ni­ca­tion au­thor­ity Cyta.

The pri­vati­sa­tion and split up into com­mer­cial op­er­a­tor and net­work owner of telco Cyta and the Elec­tric­ity Au­thor­ity of Cyprus, aims to raise about ?1.4 bln for the state by 2018, in­clud­ing from the out­sourc­ing of ser­vices and man­age­ment at Li­mas­sol port, which should be com­pleted by mid-2016, as well as the sale of other sta­te­owned as­sets.

In state­ments af­ter the meet­ing with the heads of the Troika, Fi­nance Min­is­ter Harris Ge­or­giades said on Fri­day that the most im­por­tant point of the eval­u­a­tion was the up­ward re­vi­sion of the ex­pec­ta­tions for 0.5% GDP growth in 2015, com­pared to a con­trac­tion of 0.5% es­ti­mated last Spring.

“The pru­dent fis­cal pol­icy will con­tinue and I think that the com­bi­na­tion of fis­cal con­sol­i­da­tion with the re­turn to growth and the grad­ual ad­just­ment of the econ­omy that we have achieved, is per­haps the most im­por­tant suc­cess of the Cypriot pro­gramme and con­firms the need to con­tinue to fol­low this pru­dent but ef­fec­tive pol­icy to pro­mote re­forms and con­sol­i­da­tion,” he said.

The em­pha­sis is now on fur­ther pro­mo­tion of the ma­jor struc­tural changes that both the econ­omy and the coun­try need. Ge­or­giades said that be­fore the end of Au­gust the Cab­i­net should adopt the bill re­lated to the re­form of the civil ser­vice, and the bill that fa­cil­i­tates the at­trac­tion of a strate­gic in­vestor for Cyta.

The bill pend­ing be­fore par­lia­ment on the is­suance of ti­tle deeds to bor­row­ers who are ex­posed to de­vel­op­ers is sched­uled to be de­bated in the ple­nary on Septem­ber 3 as deputies failed to put the mat­ter to a vote prior to clos­ing the House for a sum­mer re­cess.

Ge­or­giades added that the bill to reg­u­late and al­low the sale of loans should be ap­proved by par­lia­ment by the end of Septem­ber and will also safe­guard the rights of bor­row­ers, which are not af­fected by the sale of loans.

Re­gard­ing the health sec­tor, the Fi­nance Min­is­ter said that among the im­por­tant re­forms to be pro­moted is the ad­min­is­tra­tive and fi­nan­cial au­ton­omy of public hos­pi­tals, adding that sig­nif­i­cant progress has been achieved in this di­rec­tion by the out­go­ing Health Min­is­ter Philip­pos Pat­salis, who re­signed last week and has been re­placed by Ge­orge Pam­borides.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.