Cyprus Mail

Raft of new bailout measures passed

DIKO leader Nicholas Papadopoulos

By Elias Hazou

Parliament last night passed into law a raft of measures that are a condition for the release of the next tranche of bailout aid to Cyprus, including the contentious exemption of Central Bank employees from public-sector pay cuts and a freeze on promotions and new hiring.

The next tranche of assistance cash (€186m) is expected to be disbursed to the otherwise bankrupt state before year’s end.

A heated debate took place on the exclusion of Central Bank employees from salary reductions and a freeze on promotions and new hires in the public sector. The conditionality was inserted on the initiative of the troika of international lenders, which consists of the European Central Bank, the European Commission and the International Monetary Fund.

“It’s an obligation arising out of the memorandum of understanding, and we have to comply whether we like it or not,” DIKO leader and MP Nicholas Papadopoulos remarked.
“And we don’t like it,” he added.

Despite grumbles that the exemption gives preferential treatment to the Central Bank – whose salaries are also bankrolled by the taxpayer – the law went through by majority after MPs were assured by the Central Bank that the latter would, regardless, voluntarily slash salaries in line with public-sector cuts.

AKEL, the Greens and the Citizens’ Coalition voted against the bill.

Earlier in the day, the House Speaker had warned the Central Bank governor that parliament would refuse to pass the legislation unless it was informed that the banking regulator planned to cut salaries of its own accord.

The governor’s response, affirming that the Central Bank intended to do so, came just as MPs were debating the issue. At around the same time, an MP in the plenum received a text message from a Central Bank board member saying that the board had in fact passed just such a resolution two weeks ago. The revelation caused some consternation among MPs who felt they had been kept in the dark by the Central Bank chief.

Parliamentarians also grudgingly passed legislation limiting the total annual public pension benefits of MPs to 56 per cent of the highest pensionable salary of the official’s career. This was another condition set by the troika for the release of the third disbursement of assistance.

By unanimous vote, the House approved a bill granting commercial banks free access to the Department of Lands and Survey (DLS) registry. Banks no longer have to go through the head of DLS to gain access to information regarding home and land ownership.

The measure was requested by the troika in a bid to create a database that can be easily accessible so as to assess loan risks and to quickly verify the validity of claims made by future loan seekers.

The law was passed but with a caveat inserted by the Greens, by which banks are obliged to notify borrowers prior to scrutinizing the latter’s assets.

Another legislation concerned licences issued to travel agencies in Cyprus that are operated or managed by an EU national other than a Cypriot citizen. Under the change, such travel agents are no longer required to certify within six months of obtaining a licence that they are fluent in at least one of the official languages of the Republic; instead, travel agents will now be required to demonstrate adequate knowledge of at least one “major tourist language.”

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