Final consultations on the updated Memorandum take place in Cyprus

Final consultations on the updated Memorandum take place in Cyprus


By Spiros Sideris – Athens

Cypriot authorities and the Troika are now beginning the final discussions for the fifth update of the economic adjustment program, with the most important issue in the debate being the bill for the mortgage property disposals. The discussions will start in the Central Bank to talk about technical issues related to the financial sector, and then the Governor of the Central Bank Christalla Georghadji will go to the Ministry of Finance to discuss the issues of the financial sector that have to do with the MoF. After that, the discussion will focus on issues that relate specifically to the government.

According to information, the goal is for the discussions to be concluded today, as was the original plan, while if necessary the stay of international lenders in Cyprus will be extended.

Regarding the bill on disposals, although the differences are not yet bridged with the new design, the bill will go to Cabinet on Monday for approval, while it is possible for the framework on the legislation reform for insolvency of natural and legal persons to also be brought in the same session, which under the Fourth updated memorandum should be approved by the end of July. Based on the Memorandum, the main residence is exempt from disposals of property mortgage until the implementation of the framework for insolvency, which will take place in December.

Until late yesterday, through marathon negotiations, the Ministry of Finance and the Central Bank were putting the finishing touches to the draft of the updated Memorandum, which was sent by the Troika to both parties. One part, addressed to the Ministry concerns the financial part and the reforms, while in regard to the financials the blueprint was sent to the Central Bank.

The controversial bill for the divestitures, has already been sent to the Legal Service for legal vetting, since yesterday. The tipping point is the Troika’s refusal to accept the government’s provision that enables the citizens to take legal action when it is determined that their property will be put under auction. Creditors believe that this will lead to endless time-consuming procedures. Another issue is the debtor’s right to appoint their own estate appraiser in the process of divesting. The two issues, among others, will be in today’s negotiation, when the differences between the two sides will be discussed on a political level. The final deal will involve the heads of Troika, Finance Minister Haris Georgiadis, and Central Bank Governor Christalla Georghadji, with the aim that the updated Memorandum will have been agreed upon by Friday.

On the fiscal side, the heads of the Troika are expected to reach an agreement with the Finance Minister regarding the state budget of 2015. Governmental sources have reported that if there is an agreement from both sides on the bill for divestments, it is possible early next week to be put before the extraordinary meeting of the Cabinet Council, which might even take place on Monday, if all goes smoothly and all the differences between the government and the Troika are decided. After the bill on divestitures, next comes the ultra-bill on the insolvency of natural and legal persons.

Troika’s technocrats, the Ministry of Finance, Ministry of Commerce, the Legal Service and the Central Bank discussed these days the under configuration bill for the insolvency. The purpose of the bill is to encourage debt restructuring instead of bankruptcies and provide incentives for creditors and debtors to avoid bankruptcy of natural persons and legal persons liquidation. One of the issues on the agenda is apart from the financial commissioner to have another mechanism that will act in favor of the banks and borrowers. Among other things, there is a debate on the bill for those who have already gone bankrupt, so that they can have a second chance to settle their debts.

Finally, in the negotiations between the Troika and the government lies the Cooperative, while under the creditors scrutiny is the restructuring plan.