New House finance committee focuses on EU harmonisation

The new House finance committee held its first session on Monday after May’s parliamentary elections, where among others it discussed setting a deadline for passing yet another extension to a freeze on home foreclosures.

Parties have tabled over a dozen separate bills on extending the halt on foreclosures – citing the economic fallout from the coronavirus pandemic – beyond the end of July, which is when the current freeze expires.

Nationalists Elam submitted a legislative proposal of their own, which specifies no cutoff date whatsoever for a foreclosures freeze.

Some lawmakers proposed unifying the disparate bills into one, to speed things up.

For its part, the government has rebuffed any further extensions to the foreclosures freeze, citing moral hazard and the damage to banks’ balance sheets.

The government, the central bank and foreign organisations have previously warned against constantly extending the suspension of foreclosures, saying it would further bolster the weak repayment culture and impact the lenders’ capital and provisions for bad debts.

It could also prompt ratings agencies to downgrade Cyprus to non-investment grade, a move that would make it impossible for the island to borrow from international markets.

The finance committee’s immediate priorities include three bills aimed at harmonising with EU law, which committee chair Christiana Erotokritou said must pass by the end of July, before the House goes into summer recess.

In addition, there are a number of reforms associated with the National Recovery and Resilience Plan – policies and programmes that Cyprus has pledged to implement in order to tap EU cash over the next few years.

Harris Georgiades, an MP with ruling Disy and a former finance minister, said the recovery and resilience bills are of the utmost urgency.

Like any other member-state, Cyprus will get 30 years (2027 to 2058) to pay back the entire €1.2 billion earmarked amount from the EU’s Recovery and Resilience Facility.

As for the related reforms themselves, they have an implementation timeline up to 2025-2026. The proposed reforms are subdivided into areas or modules, but altogether the national plan includes 267 milestones and targets.