Troika team back in Cyprus on January 27

The next mission of inspectors from the Troika of international lenders is expected to return on January 27 for its sixth review of the financial assistance programme, having postponed its arrival when parliament passed a new bill that would delay implementation of the foreclosures bill until January 30.

Discussion in the House of Representatives on Thursday.

The Troika mission will focus on the insolvency framework, a “critical priority” for the programme at this stage, an IMF source was quoted by the state-run Cyprus News Agency as saying.

“A full review mission will begin once the suspension of the foreclosures law is expired. This is the plan at the moment,” the source said.

The House wanted the government to submit a package of all five bills of an insolvency framework, which was scheduled to be put into force in January 1 to set up a safety net to protect vulnerable groups from foreclosure of mortgaged property.

This bill is considered a critical priority of the programme given the high level of non performing loans in the Cyprus banking system, presently beyond 50% of all loan books held by commercial banks.

So far, three bills form the package have been before the House, while the fourth is expected approved by the Cabinet in its next meeting.

The fifth bill of the insolvency package is still in the hands of the Troika for scrutiny.

The IMF official said that the next tranche of 86 mln euros was halted following parliament’s decision to suspend the foreclosures law and will be disbursed when Cyprus fulfills its obligations related to it.

The Troika initially informed the Ministry of Finance that it was suspending its forthcoming visit to Cyprus, scheduled for January 20.

President Nicos Anastasiades said last week that he would

is expected tabled to be send back to parliament (veto) the revised bill that was introduced despite warnings from the creditors from the IMF, the ECB and the EU, that such a delay could jeopardise the next tranche of about 430 mln euros, as part of the 10 bln bailout agreed in 2013.

The revised bill was drafted by the smaller socialist EDEK group and supported by all opposition parties in December in an effort to appease rising concerns from home-owners that the new package on foreclosures and insolvencies favoured banks and that mortgaged properties would be sacrificed.

Having already secured 350 mln euros from the EU and the ECB, parliament proceed with the draft changes, after which the IMF said it would not go ahead with the final pat of 86 mln euros.

The latest rift may also force the government’s hand to urgently conclude the outstanding pieces of legislation that have yet to be tabled in parliament.