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Will Cyprus get next bailout tranche?

Although the foreclosures law has yet to be voted by parliament, the Cypriot authorities believe that the troika of international lenders will disburse the next tranche of the bailout on 15 December.

Will Cyprus get next bailout tranche?CYPRIOT authorities believe that the next bailout tranche of the rescue plan will be disbursed soon while Troika has already scheduled the next visit to Cyprus, although the foreclosures law has not yet been voted by the Parliament.

The Ministry of Finance expects that the fifth tranche of the bailout will be disbursed over the next two weeks and the sixth assessment will commence on January 27.

A senior Finance Ministry source told StockWatch that the Cypriot authorities were informed officially that the international creditors will be in Cyprus by late January, irrespective of the growing reactions of the opposition in relation to the controversial legislation on foreclosures.

The Ministry expects that the new reactions of the opposition in relation to the disputed bills on foreclosures and insolvency will not reverse the smooth implementation of the program.

The program remains stagnant since the last Troika visit in July, due to problems in promoting the bill to hasten foreclosures, despite the substantial improvement in public fiscal indicators.

Cyprus is expected to show a deficit of 2.5% and a primary surplus this year – two years prior to the initial estimates.

According to the Finance Ministry, the tranche is now expected to be disbursed on December 15.

On remarks that the opposition is promoting draft laws to suspend the implementation of the foreclosures law, the senior Finance Ministry source estimated that the decision for the disbursement of the tranche is final.

He noted that the full implementation of the law will be feasible after the preparation of relevant regulations.

These regulations have not yet been approved and, according to the Attorney General’s office, the law cannot be applied without them.

The opposition is preparing proposals to suspend the implementation of the Law on the foreclosure of primary residence. It also disagrees with various provisions of the insolvency framework.

The insolvency framework, which consists of five laws, is not expected to be approved before the end of the year as stipulated in the rescue plan.

Readers' comments

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  • Phil is correct – Finance Minister Harris Georgiades has said that the European Stability Mechanism has approved the disbursement of €350 million to Cyprus.

    So far Cyprus has drawn about €5.7 billion from the program.

  • Phil says:

    The simple answer to you question, Will Cyprus get next bailout tranche on the 15th December? is YES

    Phil

  • @Stuart on 2014/12/04 at 10:00 am – The sixth tranche was the one being held up as the insolvency legislation had not been approved by Parliament (regrettably the MoU made no mention of its implementation).

    The Eurogroup is meeting in Brussels today to ratify the release of the €360 million and the Finance Minister is there.

  • jjames says:

    Might this quote from the EU president sum up their attitude?
    Mr Junckers states:

    I intend to make use of the prerogatives of the Commission to uphold, within our field of competence, our shared values, the rule of law and fundamental rights, while taking due account of the diversity of constitutional and cultural traditions of the 28 Member States.

    I say that they are covered because they know they are “incompetent” when it comes to reigning in the Cyprus politicians and of course lying, cheating and generally deceiving is one of the diverse cultural traditions to which Mr Junckers refers and which the Cyprus government practise so well!!

  • Deanna says:

    Well, I may be proved wrong, but I think the money will be released anyway – even if with more conditions attached. If Cyprus goes under there would be a domino effect and the whole zone would crumble. Merkel knows this (who would’ve thought, a few months ago. that she would be considering QE), and will do anything to keep her ’empire’ afloat.

  • Stuart says:

    Nigel. Could you clarify something, please?

    Back in October, eurozone finance ministers endorsed in principle the disbursement of the next aid tranche (which we understood to be the 5th tranche) but the Eurogroup also added that the payout would be recommended “so long as this planned legislation on foreclosures remained unchanged.”

    By opposing the introduction of this planned legislation, the opposition parties have been accused of putting this December tranche of bail-out aid in jeopardy and hence have held off debating the proposals until after the tranche has been delivered.

    However, according to what you say below, it is not the 5th tranche that is dependent on this proposed legislation going forward but the 6th tranche in 2015, according to the latest version of the Cyprus MoU. That being the case, why all the worry and concern about the 5th tranche scheduled to be delivered in a few days time on 15 December?

  • Mike says:

    So in effect we have 10 days to see if the Troika is as big or good as its word or if our politicians are far smarter and more astute than those of the EC & IMF. I guess the result will also indicate the true reasoning behind bailing out a failing lame duck by way of certain Banks and institutions by passing all costs onto the taxpayer whose funds were stolen in the first place to give to those who squandered it. Nice work if you can get it.

    Who was it that said we need to pay the highest global salaries to attract and retain the finest talent? It seems to me we are paying top dollar for the planets most inept morons.

  • MartynG says:

    I thought All Fools Day was in April. Seems to me the Troika guys n gals extended their stay, enjoyed an extra jolly weekend in the Cyprus sun, and then returned to Base to see how they might help those rather strange but ‘friendly’ Cypriots, in the country furthest away from the EU political and administrative bases in Northern Europe. The entire Haircut thing last year, stills looks as if it was a crisis-driven, ‘way out of order’ method to prevent a minor Member of the Eurozone ‘upsetting the entire EZapplecart’, a palliative which may well yet be challenged as being WELL Out of Order.

    I agree some poor unfortunate ordinary folk that have ‘fallen on hard times’ or been ‘conned’ into entering contracts, liabilities via multi fault-ridden developer-lawyer-banker ‘arrangements, deserve special attention. But there should be NO ‘olive branches’ being offered to shed loads of people who obviously DID know what they were doing, taking on big loans, doubtless at ‘mates rates’ and with no real intention of repaying or, in some cases it seems, even servicing the interest on their liabilities.

    Ne’er mind say the Troika, we’ll send the lads and lasses back to Cyprus in January, once they’ve recovered from their Christmas and New Year celebrations, so they can enjoy some more of that lovely Eastern Mediterranean sunshine that we Northern Europeans crave for so much.

  • The precise wording of the relevant clause in the Memorandum of Understanding is as follows:

    “The legal framework in relation to foreclosures and the forced sales of mortgaged property will be amended in consultation with the EC and the IMF and informing the ECB and the ESM, and adopted by the House of Representatives prior to the granting of the sixth disbursement of financial assistance.

    This new legal framework will encompass the relevant legislative amendments and will have immediate effect for all mortgaged properties except primary residences (for which provisions will enter into effect by 1 January 2015, in line with the adoption of the insolvency legislation). The legal framework will establish a swift foreclosure procedure, which will allow for auctions to be conducted by mortgage creditors, without interference from government agencies.

    The relevant regulations on the procedural rules for sale by auction or other methods will be adopted expeditiously.”

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