Petrides warns against suspension of foreclosure bill

Finance Minister Constantinos Petrides on Wednesday said the decision on a possible foreclosure suspension now lies with the House, warning, however, that amidst rising rates, there is a danger that this measure may evolve from temporary to permanent, and ultimately cancelling out the foreclosure bill entirely.

Petrides was asked to comment on Brussels’ recent comments, indicating that they are monitoring developments around this issue, and the possibility of this affecting the disbursement of the first instalment of €85 million through the European Recovery and Resilience Fund (RRF).

The Finance Minister said that both the Ministry of Finance and the Central Bank of Cyprus (CBC) had warned of the consequences, before noting that “the consequences do not only concern the risk of not disbursing the next tranche, which is very important in the period we are going through, since we cannot afford to leave any funds unused.”

“But also, there is possibly an even greater risk, which is that a state of affairs that involves a temporary measure, may tend towards permanence, with the risk of weakening or even cancelling the foreclosure framework,” the minister added.

Moreover, Petrides explained that “if this thing happens, then they will certainly punish us with a downgrade”.

He also stressed that it is very important for Cyprus to maintain a framework for foreclosures, especially in a period of heightened uncertainty.

The Finance Minister went on to say that with amidst rising government bond yield, Cyprus cannot risk a possible downgrade, especially after the country’s credit rating was rebuilt with “pain and hard work”.

“And to stay out of the markets at a time like this will reward who exactly at the end of the day?,” Petrides asked.

“The defaulters and people who don’t pay their instalments, which in turn will cause all of the people who have been paying and are up to date their loans to think that the political establishment will find a way to make it okay if they don’t pay, without punishment, possibly with many more extensions,” he added.

Meanwhile, Petrides also issued a reminder that the Estia housing plan and the Ikia home scheme have already been implemented, while the rent for mortgage plan is also pending.

He also added that while there is an informal agreement with the banking sector that no sales will proceed for borrowers who fall under this plan.

“So I don’t see the point of a new extension with all these serious risks for the economy that we have previously highlighted,” the minister stated.

“I think we have repeatedly presented our concerns before the House, but the ball is in their court,” Petrides concluded.