REPRESENTATIVES from the troika of Cyprus’ international lender are to start their eighth evaluation of the island’s economic adjustment programme today and are expected to remain on the island until 13th November.
Prior to the arrival of the troika delegation a senior official from the European Commission told the Cyprus News Agency that the pace of reforms had slowed down significantly.
Speaking to StockWatch Finance Minister Harris Georgiades stressed that “I do not expect even the process of the last assessment and the Memorandum will be completed, without the adoption by the legislature of the bill on the sale of loans.”
The bill should have been approved by the end of last September. It is anticipated that the Financial and Budgetary Affairs Committee will give the bill the green light on Monday and schedule a date for its discussion and approval at a plenary session of the house.
Legislation on the sale of loans is seen as vital to reducing non-performing loans (NPLs) by enabling loans to be sold to third parties in compliance with the EU’s four basic freedoms. However, there is a fear in Cyprus that this would result in the sale of defaulting mortgages and large swathes of property would fall into foreign hands, which would have political implications.
Other critical issues under review include the bills concerning the reform of the public sector, loan securitisation, the resolution of the ex Laiki Bank, the implementation of the National Health Scheme (delayed until 2017), the privatisation of the Cyprus Telecommunication Authority (CYTA) and the separation of the Electricity Authority’s (EAC) activities.
On property issues, the implementation of the new Immovable Property Tax (IPT) using revised property values has been deferred until 2016 as a result of delays in its discussion by parliament. The European Commission has noted that “This points to high risks for the implementation of the IPT reform.”
Furthermore legislation specifying the frequency of mandatory updates of cadastral property values, which should have been adopted by mid-October 2015, has yet to be implemented.
Other outstanding property-related issues include:
- legal or contractual standards for property sales contracts and connected loan and mortgage arrangements (which should have been in place by last October).
- a mandatory escrow account system to ensure that all payments related to a property transaction are processed in a safe manner to provide safeguards against abuse (end of last September).
It looks as if the troika delegation is going to be kept very busy!