By Elias Hazou
THE BANKRUPT government was expected on Monday to cash in the sixth bailout tranche from international creditors, seemingly putting behind it concerns it would not be paid – although there could yet be another twist to the tale.
The release of €350m by the European Stability Mechanism (ESM) is set to be followed up by the International Monetary Fund (IMF) which by Friday is to approve the disbursement of another €86m that forms part of the same instalment.
Enactment of effective repossessions legislation – and with no strings attached – was a precondition set by Cyprus’ international lenders for releasing the €436m tranche. The ‘troika’, as it is known, sees banks’ non-performing debt as a major drag on the economy and that banks must be allowed to recover these loans without impediments.
But things could get hairy this Thursday at the parliament’s final plenary session of the year, where opposition parties are likely to put to a vote bills suspending the enforcement of home foreclosures.
Two parties, AKEL and EDEK, have submitted bills, the first to suspend implementation of the foreclosures law until July next year, the second to suspend it until the beginning of the year. EDEK’s legislative proposal has the backing of DIKO.
The opposition say procedures for forced home sales must be blocked until a ‘safety net’ is in place. That ostensible safeguard is the so-called insolvency framework, consisting of five bills regulating such matters as corporate and personal bankruptcy, examinership and others.
So far the government has drafted just two of the bills, and it’s doubtful whether it can produce the remaining three by year’s end, as promised, in a bid to assuage the opposition’s professed concern for homeowners being left out on the street.
Again, it all hinges on DIKO’s stance on the House floor come Thursday, and the whole foreclosures debacle could go down to the wire.
There is now talk that in the worst-case scenario, and having already received the tranche, the government might have to return the money to the troika in order to keep things on an even keel with its creditors.
This was suggested by a senior government official speaking to daily Politis; the official was not named.
In addition to causing payments from the EU/IMF to be delayed, the repossessions kerfuffle has also thrown off trajectory the adjustment programme; the last review mission of the ‘troika’ took place more than five months ago.
Perhaps ironically, the accompanying regulations to the foreclosures law have yet to be passed by parliament, meaning that key aspects of repossessions – such as auctions – are unenforceable