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Cyprus programme review delayed

The European Commission has said that it cannot continue with the next review of the Cyprus adjustment programme following a decision by parliament to delay the Foreclosures Law.

Cyprus programme review delayedFOLLOWING a decision by the Cyprus parliament ratifying the suspension of the foreclosure law on Thursday, the European Commission has stated that it cannot continue with the next review of the Cyprus economic adjustment programme.

At a plenary session of parliament 32 MPs voted to suspend the foreclosures law until the end of January, while 21 voted to support President Anastasiades.

According to Stockwatch a European Commission spokesperson said “We take note that the House of Representatives has confirmed its December adoption of a bill that suspends the application of the Foreclosure Law ’til end-January.

“As we said last December, the suspension of the implementation of the so-called Foreclosure Law (the adopted legal framework for private debt restructuring) conflicts with the programme requirement to have it applied immediately. We recall that tackling non-performing loans is a main challenge in Cyprus.”

Figures released by the island’s Central Bank on Friday show that non-performing loans at the end of November reached €28.2 billion, approximately 160% of Cyprus’ GDP and 50% of all loans.

The spokesperson added “We are in close contact with the Cypriot authorities on this matter in order to hear from them how they plan to address this issue and maintain Cyprus’ good record of programme implementation.

“That said, the conditions are not being met to institutionally conclude a full review of the programme implementation (6th review) in February.”

It would appear that relations between Cyprus and its troika of international lenders are deteriorating. After making a positive start to the implementation of the economic review programme, the foreclosures law has been delayed and it seems extremely unlikely that, with only two weeks to go, the five insolvency bills will be in place by the end of January deadline.

Readers' comments

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  • Mike Shermer says:

    There increasingly seems to be a difference in what the European Union consider to be logical, and what the brilliant minds that make up the Cypriot Government consider to be common-sense…..They need they money in order to survive…..the Troika do not need to loan them that money….where I come from, it’s the lender who sets the terms, not the borrower…another perfect example of the blind arrogance of the Cypriot mind …………..

  • MartynG says:

    Cyprus chickens are coming home to roost, thick and fast: now, as prophesied, the EC itself is saying ‘if you want to fool around with us, you will be the losers’. Maybe the Cyprus opposition aren’t “plain stupid”, maybe they see there is an opportunity to join a Greek Grexit in the hope they can escape the Troika-imposed shackles that have been imposed following the reckless economic policies adopted by previous Cyprus administrations?

    Greeks we know are already draining banks such as Alpha and Eurobank of their deposit bases. Fear (of a repetition of what has happened before – and elsewhere) is back on the Greek streets. SuperMario has copped out of his usual knees-up in Davos in order to, finally, later this week, launch a raft of QE funds. The Euro could very soon quite easily go into a tailspin. The GB£ could continue to appreciate, so if you can: stay in £s and wait until the Euro, or a new Cyprus £, perhaps, settles at a much-reduced value. The next 2/3 weeks could prove to be hectic, dramatic, costly! – or if u ‘get it right’ – Profitable!

  • Mike says:

    Stuart – As has often been hinted at, the more our politicians are accommodated and dealt with in a ‘kid gloves’ way the more they will feel justified in trying it on one step further closer to the edge. It justifies their existence and gives opportunities to demand media time and column inches to spout their rhetoric. Lets be fair, there are no tangible positives that could be counted as achievements is there. Hopefully, now it is obvious we act like spoilt brats, those holding the purse strings will use the only thing we seem to worship – money, to get us to grow up and behave in an adult and responsible way. Please don’t hold your breath though.

  • Steve says:

    This is not good news. The incentive for Cyprus to remain in the Euro, if not in the EU, has been severely eroded. Mrs Merkel is telling the Cypriot parliament that Germany will not be held to ransom and they have to decide whether to go or not to go. To complicate matters the Greeks could well vote in the general election for early departure from the Euro and Cyprus is well-known for supporting Greece (and Greece for not supporting Cyprus when it matters). The Greeks have been playing the game for some years now; get as much aid and debt write-offs as you can and then leave the Euro and devalue. Others have done something similar.

    If Cyprus leaves the Euro, there will soon be a huge devaluation of the new currency and everyone’s savings, property, everything, will be devalued too. Politicians pretend that devaluation does not cost the local citizens anything and some politicians even believe their own rubbish, which makes the decision easier. Expats with their money still in GB pounds would benefit hugely – so much for investing in the currency you will be spending in.

  • Stuart says:

    Several of us who regularly contribute to these columns have predicted that relationships between the Cyprus authorities and the Troika would inevitably deteriorate if the behaviour of the opposition parties continued in the obstructive and confrontational mode we have witnessed lately.

    The Troika has been very patient and has politely described the progress made thus far as “Cyprus’ good record of programme implementation”. Unfortunately, these warm words only serve to conceal a succession of revisions to the MoU brought about by Cyprus’ failure to comply with deadlines and its introduction of obstacles in an attempt to delay the foreclosures law.

    How many times have we seen the goal posts moved and even stadiums changed to accommodate the lack of sincere desire by the authorities to get Cyprus back on track following the bail out agreement which is now being put at risk of suspension if this negative behaviour does not get addressed any time soon.

  • clive of Payia says:

    Obviously Cyprus working hand-in-glove with Greece regarding the troika. Both hoping that Mrs Merkel will loose patience with them and unceremoniously throw them out of the eurozone and probably the EU without penalties. Hope UK Foreign Office watching this as well. I wouldn’t be the slightest upset if my country was also shown the exit.

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