By Elias Hazou
The foreclosures furor is set to drag out much longer than anticipated, it emerged on Tuesday, with the next tranche of bailout cash for Cyprus put on hold until late October or possibly even November.
That came about after the Supreme Court on Tuesday set October 20 as the date on which it will hear closing remarks on whether the four repossessions-related pieces of legislation referred to it by the President are in violation of the constitution or not.
“It is a negative development, but of course the government cannot interfere with the course of justice,” the government said through spokesman Nicos Christodoulides.
The timeline was decided by the Supreme court during the course of the first hearing in the case.
The lawyers representing the House – who contest the state’s claim that the bills are unconstitutional – have been given until September 26 to submit their appeal. Representing the House in the high-profile case are lawyers Christos Clerides, Giorgos Serafim and Achilleas Emilianides.
On behalf of the state, the Attorney-general will submit an outline of his closing arguments on October 3, and the lawyers representing the House submit theirs by October 13. The Attorney-general next will prepare a response to the parliament’s arguments by October 17.
All documentation must be filed and arguments made by October 20, on which date the full bench of the court will hear final remarks and then adjourn to deliberate. It could subsequently take the judges several days – late October or early November – to reach a decision.
Quizzed by reporters outside the courthouse after the hearing, Attorney-general Costas Clerides declined to speculate as to when the Supreme Court might deliver its final judgment.
Under this timeline the government misses the next cut-off date of October 13, when the Eurogroup was scheduled to meet to evaluate Cyprus’ compliance with the adjustment programme in order to give (or not) the green light for the release of the next tranche of financial assistance.
Also pending is the fate of two more contested pieces of legislation relating to repossessions. The President has likewise refused to sign off on these and has sent them back to parliament.
Last week eurozone finance ministers said Cyprus would not be eligible for the next tranche of financial assistance unless and until it resolves the question of the six contentious pieces of legislation. Cyprus’ international lenders also made it clear that the six additional bills are unacceptable, injecting a sense of urgency into the government here to ‘kill’ these items.
In an apparent boon to the government, however, the Eurogroup had refrained from any negative commentary on Cyprus’ adjustment programme.
The government says it has enough funds for now without another cash injection from its international creditors.
It’s understood that on its own the government will be able to finance operations until the end of November.
Rather, the key concern relates to the upcoming EU-wide bank stress tests, in mid-October. European banking authorities may deem that the additional bills, which weaken the main foreclosures law, will diminish Cypriot banks’ ability to recover non-performing loans tied to real estate.
In that case, these NPLs would have to be discounted as assets and Cypriot banks would be required to raise additional risk capital – a big if not impossible ask.