SPEAKING to the Cyprus News Agency, Head of the Insolvency Service Giorgos Karotsakis said that the action plan for implementing the insolvency framework was being evaluated by the by the Ministry of Finance and that it should ensure the full functioning of the Insolvency Service, the IT infrastructure and the licensing of insolvency consultants.
The action plan due to be discussed when the troika next visits Cyprus. (Under the updated Memorandum of Understanding, the Action Plan should have been ready by the end of June.)
Mr Karotsakis stressed the importance that the International Monetary Fund (IMF) places on the framework in contributing to the restructuring of loans and restoring investment and development in Cyprus.
“The IMF report makes it clear that the insolvency framework will help reducing non-performing loans (NPLs) to a large extent, in order to reset the financial system through the effective reduction of NPLs,” he said.
However he didn’t comment about the IMF’s estimate that the insolvency framework would reduce private sector debt by between 3% and 12% of GDP. Based on an assessment carried out by the banks, NPLs that may be eligible for the insolvency process could range between €1–3 billion (6% to 7% of GDP).
Mr Karotsakis pointed out that the Insolvency Service will take all measures and actions necessary to ensure the implementation of the insolvency process including a system to monitor and evaluate its effectiveness in reducing NPLs.