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Eurogroup statement on Cyprus

The Eurogroup has called on Cyprus to tackle the very high stock of arrears by facilitating the sale of loans and ensuring that title deeds are transferred to property buyers without delay.

Eurogroup statement on CyprusTHE EUROGROUP welcomes the institutions’ conclusion following the sixth review mission that Cyprus’ adjustment programme has been brought back on track.

The fiscal performance continues to be solid, the debt outlook has improved, and structural reforms are progressing in several areas.

We note with satisfaction the signs that confidence is strengthening, the economy is emerging out of recession, and the stabilization in the labour market, although unemployment remains high.

Reforms in the financial sector have progressed. After repeated delays, the legal framework establishing a new foreclosure procedure has entered into force. A comprehensive reform of corporate and personal insolvency laws has also been adopted. These developments have marked an essential step towards addressing the very high level of non-performing loans, which is a drag on restoring growth and job creation in Cyprus.

To sustain the progress achieved so far, we reiterate the importance of ensuring a full, swift and effective implementation of these frameworks.

Further action to effectively tackle the very high stock of arrears remains a key priority, with important ground to cover in the coming months, notably facilitating the sale of loans and ensuring that title deeds are transferred without delay to property buyers.

We call on the authorities to lend renewed momentum to the implementation of the fiscal-structural and structural reform agenda, including privatisation and public administration reform, in order to improve economic growth prospects and strengthen public finances, while safeguarding the protection of the most vulnerable groups.

The Eurogroup considers that Cyprus’ overall positive track record since the beginning of the macro-financial programme has paved the way to the abolition of all capital controls on transactions earlier in the year.

In view of the above, the Eurogroup endorsed in principle the disbursement of the next tranche of financial assistance to Cyprus. Subject to national procedures and formal approval by the ESM governing bodies, the ESM is scheduled to disburse EUR 100 million in mid-July. Concurrently, the IMF Executive Board is expected to decide on the disbursement of about EUR 280 million.

Readers' comments

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  • houlou says:

    @Nigel….thanks just read it…IF ‘they’ make it law it will help a lot to say the least….after numerous calls to various tax offices all I ended up with today was with further confusion…Nicosia told me if a developer has outstanding taxes to the state then these need to be cleared before land reg allows release of deeds – oh don’t worry you wont be burdened with all of it just ‘your’ portion! ie developers unpaid portion, Pafos tax people said if you get a court order forcing the land registry to release deeds without developer and court order also mention I as a buyer are exempt from paying his c.g.t or income tax then all good and well…..its a damn mess….and as aggis said the state is at fault too….onus is yes on the buyer yes to check before paying for a home but the state/land registry should have at least the decency to review at time of submitting the sales agreement at the land registry that the developer is not pulling a fast one on the people he is selling to……

  • @houlou on 2015/06/22 at 2:43 pm – There was an article in yesterday’s ΚΑΘΗΜΕΡΙΝΩΝ that’s worth reading ΥΠΕΣ: Στη Βουλή ο φόρος ακίνητης ιδιοκτησίας.

    Rough translation courtesy of Google Chrome: The third bill, he [Hasikos] said, concerns the enclaved buyers, those who bought houses or apartments from businessmen land development and no title deed, because all these properties were found to be mortgaged by the sellers. Concerns also added, and all those buyers whose properties have MEMO by the state either because the seller does not pay social security or because the seller did not pay other taxes such as VAT. “By law, all those trapped buyers released. They can take that title deed and feel that they own their property.”

    The question of whether some banks disagreed, saying said that banks have consented, had no choice. Because, he said, when they gave loans had to watch where they were going that money. “And the Central Bank also consents. We expect, therefore, that the House will vote this bill into law.”

  • houlou says:

    @Stuart, yup busted bust bankrupt developers (on paper whereas we all know they stashed their ill gotten gains abroad) and the answer to my own question, if there is a court order allowing you as a buyer to chase deeds without developer involvement, and it’s transfer time! YUP alas you owe the state his capital gains tax on your specific property… so project had 4 properties one is ‘yours’ you are the only one entitled to your deeds and then you pay the c.g.t on the one property……..Banana republic, so Mr. Hasikos do something!

  • Stuart says:

    @houlou, 21 June 2015 at 11:34 pm
    Dear Houlou,
    Did you mean ‘busted’ developers?!

  • chris says:

    Dear Houlou you are spot on Banana Republic – France has Euro Disney where Cyprus has the Mouse – (Mickey Mouse Island) that offers Europe nothing except a route to put in a pipe line to bring gas reserves from the Middle East.

  • houlou says:

    @everyone re: ensuring that title deeds are transferred to property buyers without delay.

    More hot air? just like the failed amnesty of last govt? either way On the 8 o’clock, RIK news this evening, said a 3rd bill was being drawn up to address issue of those who have bought apartments or houses and were trapped, in Hasikos words all these properties are mortgaged by the vendor ie developer, and the bill will also address issue of those who have state memos on properties, again he cited example of non payment social insurance contributions or other taxes such as non payment of vat …..

    News presenter said then that the banks and the central bank consent (hmmm not sure about that one, as I am sure banks will take a hit if they have to write off developer debts and govt may take a hit as they will lose out on taxes owed to them by bust developers, unless of course states done the maths and seen that the money they stand to make from transfer of title deeds outweighs the loss from ‘the taxes’ owed to them by developers that they aren’t going to see anytime soon) and finally presenter said it is hoped the bill will be passed in order to free all trapped buyers

    Devil is always in the detail I guess have to wait and see if there will be salvation from this rotten system.

    It just beggars belief how ludicrous the whole system is, and when you argue against it with valid points, you are just told that’s the way it is. Bunch of bananas at the grocers costs 1 euro per kilo, you buy the kilo, receipt issued, and are ready to take them away, but a govt official steps in says “even though you have paid the advertised price and have a receipt, those bananas don’t officially belong to you, the grocer who sold em to you owes the state taxes, but hey you can have them if you pay his taxes and will be able to sell them on or do as you please with them” Cyprus aka banana republic.

  • houlou says:

    Thanks Nigel, I am pretty sure that in the interview of Hasikos he mentioned why should a buyer be trapped if for example there is a memo lodged by the land registry against a plot of land that the developer has built on and sold……problem lies between the developer and the state, and not the buyer…..but as you said let.s see if a draft bill materializes….thanks again.

  • @houlou on 2015/06/20 at 11:01 pm and again at 11:19 pm & Andrew on 2015/06/19 at 1:01 pm – No-one will be able to answer your question until the draft bill (which is expected by the end of July) has been prepared, agreed by the Council of Ministers, debated in Parliament and any amendments agreed, included and voted through Parliament – and the law has been published in the Gazette.

    Sadly, I do not have a crystal ball. But as soon as I have any news I’ll publish an article.

  • houlou says:

    Have to agree with Andrew and ask the same question

    ” transferring title deeds regardless of any encumbrance. Will innocent buyers receive their title deeds if there are undisclosed mortgages, developers tax arrears or missing completion certificates?”

    I am sure though that in mr.hasikos interview recently re proposed changes he argued buyers will get deeds and why should buyers be trapped or have to pay IF the developer they bought from is the one who has problems with the bank? and also why should the buyer be trapped if the developer for example had not paid his employees social security contributions…..lets wait see if Hasikos replies to Nigels letter….I am just real worried that the MPS who are friends with the banks wont ever let a law like this pass and upset their chums…..But by god what a scam….pay developer in full, register sales agreement, skip along to get your deeds only to find out that mr.developer has encumbrances or taxes and pay up or no deed, you wonder why even bother register the sales agreement in the first place it is no guarantee that you as a buyer are protected from being fleeced in this way

  • Frank says:

    Isn’t it more honest to declare that the track has been repeatedly adjusted to fit the performance: rather than “Cyprus’ adjustment programme has been brought back on track.”?

  • Stuart says:

    €380 million isn’t a bad reward for “an essential step towards addressing the very high level of NPLs”. Stepping towards addressing something is no substitute for getting to grips with it and how many more steps will be required before the nettle is finally grasped?

    To sustain the progress achieved so far, the Troika reiterates “the importance of ensuring a full, swift and effective implementation of these [insolvency] frameworks”. Unfortunately the words ‘full’, ‘swift’ and ‘effective’ seem to be missing from the Cyprus English Dictionary.

  • UBoat says:

    Smells like a load of Bull … to me !

    Talk talk talk thats all I see… Talk is cheap and while they are doing that M0 actions are being carried out.

  • chris says:

    Andrew we all should understand that after several years of smoke & mirrors by the Cyprus establishment the title deeds fiasco will not be resolved until the lenders adopt the same hard line approach as Greece.

    Every day there breaking news with the usual political spin like Cyprus will be the Eastern Europe hub for Oil & Gas Industry. Anyone with some economic sense will realise that development of marginal gas field in Deep-water environment at the current oil prices will not happen.

    The only gas available in Cyprus is found in a orange or silver propane bottle purchased from the Supermarket. Pretty sad really but true we can only live in hope that things will change for the better but have my doubts.

  • Andrew says:

    “Further action to effectively tackle the very high stock of arrears remains a key priority, with important ground to cover in the coming months, notably facilitating the sale of loans and ensuring that title deeds are transferred without delay to property buyers”

    Will that mean transferring title deeds regardless of any encumbrance. Will innocent buyers receive their title deeds if there are undisclosed mortgages, developers tax arrears or missing completion certificates.

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