Cyprus Mail

Opposition parties continue to voice reservations over insolvency bill (Updated)

Nicolas Papadopoulos: banks are unwilling to compromise with borrowers

By Angelos Anastasiou

Despite the critical breakthrough made on foreclosures legislation on Friday, when the cabinet approved the fifth and final bill comprising the insolvency framework, Finance Minister Harris Georgiades’ optimism that both bills will be voted by the House may yet prove misplaced.

Opposition parties on Monday continued to voice reservations – or outright rejection – with regard to their provisions.

On Saturday, Georgiades said the insolvency framework, now complete, will be the key that unlocks implementation of tougher legislation on foreclosures, which has been blocked by opposition parties since last December.

Blocking foreclosures has halted Cyprus’ economic adjustment programme since, and pushed back the release of the next tranche of bailout money to the cash-strapped island until foreclosures are given the go-ahead.

“I will inform the Eurogroup [on Monday] that both insolvency and foreclosure bills have been sent to the House, and that most are at an advanced review stage,” he said.

“I believe that the issue will be resolved in the coming weeks.”

Georgiades argued that bringing the adjustment programme back on track would automatically render Cyprus eligible for participation – probably in April – in the European Central Bank’s quantitative easing programme, which started on Monday.

Such participation, he added, would be critical in bringing the country a step closer to the restoration of its financial credibility, eventually eliminating its dependence on the European Support Mechanism and the International Monetary Fund.

But for all of Georgiades’ optimism, it may not be in the bag just yet. More often than not, settling controversial bills in the House comes down to DIKO’s votes. Formerly junior partners in a government coalition with ruling DISY until they pulled out last year over President Nicos Anastasiades’ handling of the Cyprus problem, DIKO has traditionally commanded much more political leverage than its electoral size would normally allow, using that power to its advantage, and this time is no different.

An economic liberal, DIKO leader Nicolas Papadopoulos supported strict adherence to Cyprus’ economic adjustment programme since the country found itself on the verge of bankruptcy in March 2013. But by mid-2014 he veered to the left, joining ranks with communist AKEL and socialist EDEK against the programme – or “memorandum”.

The three opposition parties have repeatedly blocked implementation of foreclosure legislation – the only prerequisite by international creditors in order to finalise the country’s fifth progress review and release the next loan tranche – thus derailing the entire programme.

But of the three, DIKO is the only party that has spoken out in favour of the finalised insolvency framework. Both AKEL and EDEK, as well as the single-seater parties Citizens’ Alliance, EVROKO, and the Greens, have either trashed it outright, or called for significant amendments that are a no-go with Cyprus’ lenders. Besides those of the ruling party, DIKO’s votes are the only ones the government can hope for.

“The framework needs to be voted as soon as possible,” Papadopoulos said, but added that it “includes some clauses that may need to be re-examined”.

On Monday, the DIKO leader – and chairman of the House Finance committee – repeated his party’s satisfaction with the insolvency framework but dropped the vague “need to be re-examined” assertion, hinting at his party’s stance ahead of the critical vote.

“I couldn’t speak to the committee’s decision at this time, as it will be deciding whether the bill will be forwarded to the plenum,” he said.

At the government’s request, the finance committee is scheduled to convene on Wednesday in order to begin discussion of the fifth insolvency bill.

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