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Two final hurdles to next bailout tranche (Update)

Finance Minister Harris Georgiades: solution will boost investments

By Angelos Anastasiou

Two prior actions must be completed before the next tranche of a 10-billion emergency bailout loan by international creditors (European Union and International Monetary Fund) can be released to Cyprus, the Cyprus News Agency reported on Friday.

Citing unnamed sources, the CNA said that the government must approve the final draft of bills regulating loan securitisation, meaning the packaging and sale of loans by lenders to other investors, and another resolving instances of borrowers who are denied title deeds for their homes because the developers who had also mortgaged the property sold have since defaulted.

The deadline set by the Troika to tackle the title deeds issue is tighter than that set by parliament, which decided last month to extend the exemption of such cases from foreclosure legislation until July 10.

“Deliberations with the Troika have concluded and we are very close to finalising a review that will allow the resumption of funding to Cyprus, and render Cyprus eligible for quantitative easing tools,” Georgiades said on Friday afternoon.

“It will take a few days to form a clear picture on insolvency, and thus formally conclude the review. And since the review process is not yet completed, we are unable to speak to prior actions.”

But, he added, the economy’s significant progress has been reconfirmed.

Georgiades said he feels that the review will be positive, which has been deemed a prerequisite by the European Central Bank, for Greece and Cyprus, to qualify for its quantitative easing programme.

“We are in a position to state that important progress towards achieving the major goals for this year, namely breaking the recessionary cycle and completing the [adjustment] programme in the next ten or so months, has been made,” the minister said.

“There is no room for complacency, and we certainly must not allow ourselves to return to those past policies that led to the derailment of our economy.”

The Troika’s Cyprus delegation has been meeting with government officials and other stakeholders throughout this week, in order to finalise the sixth review of Cyprus’ economic adjustment programme.

A six-hour session with Georgiades on Thursday reportedly sealed the deal.

In terms of public service reform, a timeline culminating in cabinet decisions by June on issues including employee mobility, overhauling the promotion system, and consolidating the wage bill, has been reconfirmed.

Discussions also revolved around macroeconomic targets, resulting in the adoption of the European Commission’s Spring Forecast, which revised the Cypriot economy’s 2015 growth forecast downward, from a 0.4 per cent growth to a 0.5 per cent contraction.

The 1.5 per cent primary surplus target remained unchanged, though it had initially been set for 2016.

Georgiades however, said he was fully confident that this year Cyprus would record positive growth rates for the first time in years.

“I think that if we continue with the same consistency and intensify the reform effort, if we make moves that boost confidence, encourage economic and investment activity, we can once more prove wrong the somewhat pessimistic estimates,” Georgiades said.

On another front, the government’s suggestion relating to the contentious insolvency framework voted into law by the Cyprus parliament last month was also accepted by the Troika delegates. The framework will be implemented despite reservations, with any improvements or amendments to be examined at a later stage.


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