By George Psyllides
MAIN OPPOSITION AKEL reiterated on Wednesday that it will reject a bill on foreclosures while former government partner DIKO suggested that the legislation would not solve the problem with non performing loans (NPLs).
Parties want the bill amended and the government to renegotiate it with international lenders.
Speaking after a meeting with the finance and interior ministers, AKEL MP Stavros Evagorou accused the government of acting as the local arm of the international lenders instead of negotiating with them.
Evagorou said the party “still has its objections and disagreements on the essence and philosophy of the bill”.
“We have made it clear to the two ministers that AKEL considers the bill catastrophic and we will certainly not approve it,” Evagorou said.
The bill, whose approval is conditional for Cyprus to receive the next bailout tranche, included mass foreclosures and a fire sale of properties at humiliating prices, Evagorou claimed.
It also included primary residences in the foreclosures, he said.
“Regarding primary residences and small businesses, the safety net promised by the government is not there,” he said.
Evagorou claimed that the bill targeted the jobless and all those whose incomes have been hurt.
In the event that the bill was rejected, Evagorou said the government would renegotiate with international lenders having in mind the objections and disagreements of political parties.
The government’s legislation is due to be presented to the House finance committee probably next week.
The government’s erstwhile partner, Nicolas Papadopoulos, said that the bill as it stood would potentially solve the banks’ problems because it would limit their losses and bring huge profits to their new shareholders.
But his party could not accept the bill in its current form, Papadopoulos said after a meeting with the two ministers.
“Cypriot families however, will lose their homes and be stuck with the debts and high interest rates,” he said.
He insisted that a different framework must be set up that will include amending the definition of NPLs.
Papadopoulos also said that the government must pledge to repatriate all the cash that left the country after the deposit seizure in March 2013.
The DIKO chairman also demanded the immediate submission of the insolvency framework and the establishment of the bank code of ethics.
He also proposed that the foreclosures bill should only cover new loans and those restructured after the legislation was passed.
“So borrowers would know the new state of affairs and the risks they would face in the event they do not meet their obligations,” he said.
Papadopoulos said this would give banks an incentive to restructure loans, something they were not doing today.
The restructuring agreement could also exempt guarantors in case the property was foreclosed. It could also provide that the debt would be fully repaid if the property was foreclosed. He said this would restore the balance between bank and borrower.