THE SALE of loans to third parties and the issue of Title Deeds were among the prior actions Cyprus had to take before the next tranche of financial assistance was released, reports said on Wednesday.
According to the Cyprus News Agency (CNA), to receive some €500mln Cyprus must enact legislation allowing the sale or transfer of loans to third parties and approve a bill designed to protect those home buyers who have paid for their properties but have received no Title Deeds.
In January, MPs passed an amendment to the Banking Law (1997 to 2013), inserting a clause by which banks licensed in Cyprus may not sell a loan portfolio to credit institutions – such as hedge funds – operating here but licensed elsewhere.
This was in fear that defaulting mortgages, and in effect large swathes of property, could fall into foreign hands, with political implications.
Enactment of the Title Deeds bill, meanwhile, has been delayed due to the summer holidays, but it is expected to be discussed on September 3 by the House plenum.
The island’s lenders, known as the Troika, are currently carrying out their seventh evaluation of the bailout adjustment programme.
They discussed Cyprus’ progress during a closed-door meeting of the House finance committee.
“The Troika’s position is that the programme has succeeded, it is yielding results, and should continue,” committee chairman and opposition DIKO leader Nicolas Papadopoulos said afterwards. “After many years, Cyprus is looking at the prospect of positive growth.”
Papadopoulos said his party agreed that the programme has achieved some objectives but has failed in others.
One of the failures was the return of living standards to the time before the March 2013 bailout, which saw a seizure of bank deposits for the first time in the history of the Eurozone.
“This goal has not been achieved yet,” he said.
Papadopoulos admitted that Cyprus was in a better position than two years ago, but unemployment remained high, the economy has contracted, and important reforms like the national health scheme were delayed.
“Even worse, we have not managed to date to attract substantial foreign investment due to the uncertainty in relation with Cypriot banks,” he said.
Apart from the NHS, Cyprus must also reform the public sector, and privatise semi-state organisations, an uphill struggle considering fierce opposition of the unions.
Ruling DISY MP Prodromos Prodromou said the important thing was that the conditions were there to have a new path of growth for the economy.
What has been achieved, thanks to the people’s efforts, the correct government policies, but also the vote of opposition parties, was to restore the Cypriot economy’s credibility internationally he said.
“This is the ticket for a new course towards growth,” he said.
AKEL MP Stavros Evagorou, whose party is widely held responsible for the island’s economic woes, said the Troika ignored the fact that the economy was at a standstill.
“According to the Troika, unemployment has stabilised, but they ignore that it has stabilised at 16 per cent,” Evagorou said.
Evagorou said banks did not give loans to businesses or individuals and reiterated his party’s position that austerity was a dead end.
“What the economy needs are state investments and when expenditure is restricted to 30 per cent, growth will not come,” he said.