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Cyprus

CBC boss warns over failure to pass foreclosures bill (Update 2)

By Constantinos Psillides

Failure to pass the foreclosures bill will lead to banks failing the scheduled stress tests, Central Bank Governor (CBC) Chrystalla Georghadji warned on Tuesday, the second day of the parliamentary discussion on the controversial legislation.

“We have demonised some issues. Without a healthy bank system we have no economy. The banks may be blamed for a lot of things but that doesn’t mean that debtors shouldn’t pay their loans,” the CBC governor said.

Georghadji told parliamentarians that out of €52.5 billion in loans, €10 billion had homes as collateral and €4.0 billion of those were non-performing.

Apart from the banks, rejection of the bill would spell trouble for state finances.

The bill must be approved before the next Eurogroup meeting in mid September, for Cyprus to be eligible for the next tranche in bailout aid.

Finance Minister Harris Georgiades also warned that if Cyprus` sixth bailout tranche was not disbursed in time, “we will face difficulties and consequences beyond our control and planning.”

Following Georgiades’ statement, Chairman of the Finance Committee and DIKO leader Nicolas Papadopoulos asked the guests and the media to leave the room and the discussion continued behind closed doors.

Ruling party DISY seems to reluctantly back the foreclosures bill, with all other parties strongly opposing it. AKEL, EDEK, Greens’ Party and Citizens’ Alliance made it absolutely clear that the bill could not pass as it was.

The key to breaking the deadlock appears to be with former coalition party DIKO, whose leader Papadopoulos, supported other contentious bills.

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