Cyprus Mail

State and CBC fumble over €1.2bn land swap

By Elias Hazou

INTERIOR minister Socrates Hasikos acknowledged yesterday that the government and the Central Bank (CBC) have conflicting estimates regarding an intended asset swap between the two, but sought to downplay the matter.

As per the terms of the island’s bailout programme, the state will swap a portion of outstanding government debt held by the CBC in exchange for state land.

In this way, the government reduces its existing debt, and the CBC’s balance sheet is credited with the corresponding amount, with the land held as security.

It’s understood this is an old debt held with the central bank; the CBC stopped granting loans to the government in 2004.

According to Hasikos, the government has compiled a list of some 15,000 land plots for the asset swap.

The government estimates their worth to be €1.2bn, whereas the CBC’s valuation – based on a sample of 500 land plots – is about half that.

Hasikos said that, if necessary, and if CBC’s figures were more accurate, the government would have no problem adding to the list of land plots included in the swap.

“We shall work things out with the central bank,” he offered.

The valuations are based on the new, 2013 real estate prices.

Responding to media reports, Hasikos was quick to dismiss the notion that the lower valuations cited by the CBC would impact broader real estate prices.

“I honestly wonder why this is becoming such big a deal. You shouldn’t confuse this with anything to do with updated real estate prices and immovable property tax,” he told reporters following a meeting of the House interior affairs committee.

MPs, however, panned the administration, deriding the fact – in their view – that the central bank would turn into a realtor.

They also wondered how the government put up with the CBC questioning the land registry’s valuations.

Ruffling lawmakers’ feathers is the government’s intention to bring legislation allowing it to unilaterally sell state land without parliamentary approval.

Greens MP Giorgos Perdikis said the government’s move would set a dangerous precedent.

“For nearly 60 years, legislators, parties and the public have not allowed whoever is in government to act as an estate agent at the expense of state property, which is not the property of the government of the day to do with as it pleases.”

AKEL was annoyed with the interior minister for not having handed them the list of plots slated for the swap.

For his part, Hasikos also said the asset swap should not be conflated with the state-owned land plots which the government plans to sell to the private sector.

The government has earmarked 38 plots for privatisation, again in line with a broader drive to raise money from the sale of state assets and slash the national debt, also provided for in the agreement with international creditors.

Cyprus must generate proceeds from privatisation of at least €1bn within the bailout programme period and €0.4bn outside.

Hasikos said the value of these plots, if sold by the target date of 2018, would come to €540m. The privatisations commissioner has already invited tenders for interested investors.

Responding to questions, Hasikos said the government would not get the short end of the stick, as the plots in question would be sold not according to their current value while they are sitting idle, but rather according to their future value once they are slated for development.

None of the 38 plots had been slated for public projects, the minister said.

For example, the plot opposite the Hilton hotel in Nicosia.
“It’s the well-known case with the Qataris. There, the state has no intention of building anything, so the plot could well be sold,” he said.

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