Bill rejection will affect finances says Cyprus President

Bill rejection will affect finances says Cyprus President


By Kyriacos Kyriacou-Nicosia

President Nicos Anastasiades has warned here in Cyprus that a possible rejection of the foreclosures bill by the House will lead to dire consequences for state finances but also for the banking sector. The country under a euro bailout program since March 2013 is committed to adopt the bill in order to receive its next tranche.

In a letter addressed to the parties on Thursday, urging them to pass the contentious legislation, the President said that its rejection would in fact have the opposite effect of that assumed by the bill’s detractors.

Given the additional safeguards decided recently by the government to protect vulnerable groups and primary residences, voting down the bill would “protect large debtors at the expense of small and medium borrowers and/or depositors,” the President said.

Extra measures

In the letter, the President recapped the extra measures designed to protect homeowners who are delinquent on their loans. They include three bills, two government-funded schemes for additional protection of primary residencies, and the insolvency framework.

The measures include abolition of bank privileges that allowed them to impose unfair terms and changing the interest rate law to scrap the bank’s right to raise rates unilaterally. They also make it mandatory for banks to inform borrowers and guarantors about any changes to the base rate and generally of any other changes that concerning it and the loan installments.

Anastasiades said these extra measures go a long way toward allaying or even altogether eradicating “warranted” concerns over small borrowers and vulnerable groups. The President has called for Friday a crucial meeting with party leaders, in a last-ditch bid to soften up their opposition to the foreclosures bill.

Meeting with party leaders

Cyprus’ international lenders have made it clear failure to pass the bill this month will result in non-disbursement of the next scheduled bailout tranche. In his letter, Anastasiades expressed the hope that, during Friday’s meeting with party leaders, “a spirit and desire for responsibility toward the people and the country shall prevail.” So far all opposition parties have said they are against the foreclosures bill as it stands. But Cyprus’ international lenders, on the other hand, have ruled out any changes to it.