International lenders warn Cyprus of risk to miss assistance money

GMT 04:39 2014 Tuesday ,12 August

Arab Today, arab today International lenders warn Cyprus of risk to miss assistance money

International lenders warned Cyprus
Nicosia - XINHUA

International lenders warned Cyprus on Monday of risking its next tranche of assistance money if opposition parties prevent passage of a bill regulating repossession of mortgaged properties by the banks.
Cyprus was bailed out by the Eurogroup and the International Monetary Fund in March 2013 under a 10-billion-euro (13.4 billion U.S. dollars) deal, which involved tough austerity measures, the restructuring of the public finances and the resolution of its banking system.
The economy outperformed projections by troika experts, representing the European Commission, the European Central Bank and the IMF. But its shaken-up banking system is still burdened by non-performing loans amounting to 27.5 billion euros, or close to 50 percent of total loans.
In a note containing replies to eight points raised by opposition parties the troika said none of them could be accepted.
The opposition which musters a majority in the 56-member Cypriot parliament sought to introduce amendments when two parliamentary committees met on Monday to make preparatory work for the debate by parliament of a bill regulating repossession of properties.
Their proposed amendments mainly sought to protect the primary residence and business premises of small enterprises, but the troika said it could not accept any exceptions to forced selling of properties after the end of the year.
It also turned down one by one seven other proposed amendments to the draft legislation saying that some of them such as striking off any remaining debt after auctioning mortgaged properties and wiping off personal guarantees would violate contractual rights and could be illegal.
They said that permanently protecting the primary residence or business premises and limiting the number of repossessions would be outside the scope of arrangements already agreed upon under the bailout memorandum.
The troika tried to reassure lawmakers that the banks would not go ahead with a mass selling off of properties at greatly impaired prices saying that such a practice would impair their own balance sheets.
A spokesman of the bankers association also said that it was not the intention of lenders to embark on a mass auction of properties as this would cause a drop in prices and hurt their financial position.
The government and opposition parties agreed to return on Tuesday with proposals for a possible compromise that would also be acceptable to international lenders.

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