By Elias Hazou
INTERNATIONAL lenders stressed to authorities yesterday that Cyprus must enact by September 3 legislation releasing home buyers from developers’ obligations.
Following a meeting with the heads of the troika mission, the interior ministry’s permanent secretary Constantinos Nicolaides said the lenders insist on speedy passage of the legislation.
The House plenum is expected to convene extraordinarily on September 3 to vote through the government legislation, designed to allow people who have paid for their house in full to get the title deed, which they currently cannot because of defaulting developers’ obligations to banks.
It’s understood that passage of the legislation is a prior action for Cyprus for the release of the next bailout tranche, around €500m. According to reports, the €500m will be used in partly paying off €1bn in government debt maturing in November.
The island is again cutting it close, as on September 7 the Eurogroup is convening. By that time, the lenders must be satisfied that Cyprus is in compliance with its updated Memorandum of Understanding (MoU).
Another precondition for releasing the next tranche is that Cyprus must allow the sale or transfer of bank loans to third parties.
In January, MPs passed an amendment to the Banking Law (1997 to 2013), inserting a clause by which banks licensed in Cyprus may not sell a loan portfolio to credit institutions – such as hedge funds – operating here but licensed elsewhere.
This was in fear that defaulting mortgages, and in effect large swathes of property, could fall into foreign hands, with political implications.
Local media reports said the government was seeking to negotiate with the troika a delay for approval of the bank loans legislation, aware that the parties may try to filibuster.
According to the Cyprus News Agency, the House finance and interior committees are set to meet in ad hoc session on August 27 to review these laws.
Also on Thursday, the troika heads met with labour minister Zeta Emilianidou, discussing the Guaranteed Minimum Income (GMI) scheme, and in particular the recent relaxing of criteria so more people can be eligible for the state assistance.
The lenders later met with the leadership of the Cooperative Central Bank.
The troika mission, carrying out their seventh review of Cyprus’ adjustment programme, is expected to update the MoU by Friday.
To date, €5.8bn has been disbursed to Cyprus through the European Stability Mechanism (ESM) out of €9bn available under the approved programme. The International Monetary Fund meanwhile is to provide €1bn by the end of the programme, March 2016.