IT APPEARS that the foreclosures saga that has been dragging on since last August could be heading for its final act at the next session of legislature on Thursday. There is nothing definite yet and the irresponsibility of the political parties does not allow us to take anything for granted, but there have been suggestions that an arrangement that is acceptable to DIKO has been proposed.
DIKO leader Nicholas Papadopoulos said last Friday that his party would not seek an extension of the suspension of the foreclosures law, which expires on March 2, as long as it received government assurances that the primary residence would be exempted from repossession procedures until March 31. DISY had submitted this proposal to the House finance committee, but Papadopoulos had demanded official confirmation that the government would back it.
There is also another condition: the fifth and final bill of the insolvency framework needs to be ready. Delays in the preparation of the insolvency framework had been used as the pretext for suspending the foreclosures law, opposition parties insisting that the insolvency legislation was in place before the foreclosures law could be implemented. Finance ministry officials told deputies that the final bill, which was subject to negotiations with the Troika, would be submitted to the legislature on March 5.
The brinkmanship of the opposition parties has quite clearly alarmed the bankers. The Association of International Banks issued a statement on Friday urging deputies to vote the foreclosures legislation because by so doing they would be protecting the “the interests of their depositors and of the Cyprus economy at large.” Bank of Cyprus CEO John Hourican issued a statement on Monday saying that delays in approving the foreclosures and insolvency laws was causing harm to the banking sector, the economy and the image of the country abroad.
There have also been reports that the European Central Bank could penalise Cyprus for these delays by imposing higher capital requirements on the banks unable to reduce the big number of NPLs they have on their books. Such a development would be catastrophic, further restricting banks’ liquidity and even raising the possibility of another haircut of deposits. The government is still waiting for the release of funds that lenders have put on ice because of the suspension of the foreclosures law.
We can only express the hope that the opposition parties would call an end to their reckless populism very soon, because the theatre over the foreclosures has gone on too long and now threatens to cause lasting harm to the country. It is enough that they have proved to our lenders that we are untrustworthy and have derailed the adjustment programme for no good reason.