Overcoming the deadlock relating to the suspension of foreclosures legislation could expedite Cyprus’ return to international bond markets, while the status quo has already translated to missed opportunities available to the island’s economy, Finance minister Harris Georgiades said on Tuesday.
Speaking on state radio, Georgiades noted that the delay in implementing tougher foreclosure legislation has undermined the progress made by the country since the 2013 financial meltdown.
“[Monday’s] Eurogroup acknowledged our progress and our positive track record, but there is a pending issue,” he said in reference to the as-yet inactive law.
“This issue has averted the normal progress of the programme review process, which in turn has led to the loss of opportunities. Therefore, the Eurogroup has demanded that the issue is resolved in the coming weeks.”
Foreclosure law has been suspended by parliamentary majority since December as opposition parties cited the absence of an effective “safety net” to protect distressed borrowers, which the government has been promising in the form of a set of laws dubbed the “insolvency framework”.
The last piece of the puzzle, the fifth and final bill comprising the framework, was approved by the cabinet last week, meaning the House may now discuss the overall package. Already, opposition party DIKO has deemed the bill satisfactory and suggested it will vote in favour of unblocking foreclosures.
“We are ready to cooperate with the House in order to facilitate the speedy and effective completion of parliamentary deliberations in order to overcome this deadlock,” Georgiades said.
The Finance minister described the insolvency framework a “grand reform”, which may need to be re-assessed in due time.
“The framework introduces for the first time, the concept of a second chance,” he explained.
“When a borrower is found non-viable despite all efforts to accommodate his needs, he is offered a second chance free of all debt.”
“Obviously, as in the case of grand reforms, implementation may well reveal the need for adjustments – this is always a possibility.”
Georgiades noted that Cyprus has already missed the deadline that would enable it to participate in the “extremely important quantitative easing programme by
the European Central Bank.”
“We absolutely should have been participating in this programme, because Cyprus is one of those countries that would have benefited in the most meaningful way, to a much greater extent than other countries,” Georgiades noted.
The Finance minister said that a return by Cyprus to the international bond markets, from which it has been shut out since 2011, would also give the country a much-needed boost.
“That would be a signal for new investments in the real economy, and a move that would confirm that we are on the way to ridding ourselves of the Memorandum,” he said, referencing the Memorandum of Understanding agreed with international creditors in the spring of 2013, extending Cyprus a €10 billion bailout loan in exchange for structural reforms.