Political shock cause the positions of the moneylenders-guarantors

Political shock cause the positions of the moneylenders-guarantors

Nicosia, February 10, 2015/ Independent Balkan News Agency

Cypriot Finance Minister Haris Georgiades is “sitting on hot coals” waiting for the landscape to clear on the subject of moneylenders-guarantors that creates a gap between the Troika and the political parties.

Safeguarding the banks the only concern of the Troika

By Pantelis Diomidous of MAXHnews

The patience of the party representatives, and even of the technocrats of the Ministry of Finance, try the Troikans who appeared in the negotiations on the insolvency context, only as patrons of the rights of the banks, thus following a direct collision course.

Ultimatum and departure

The head of international lenders were scheduled to depart from Cyprus on Saturday, leaving however behind them “scorched earth”. The issue of the fifth bill on the insolvency context, which is the key to exit the dead end, is evolving in the most negative way since the troika technocrats appeared adamant and intransigent on the issue guarantors onto who they want to pass all of the unsecured liabilities of toxic debtors.

This attitude, along with the timetable set by the heads, so that until mid-March must have been voted the context of insolvency and the regulations for divestitures, in order to implement the law for auctions, raise the political fever and bring Cyprus as much as the government wants to avoid it, in direct conflict with the international lenders.

Cocktail for collapse

The meeting of the parties with the Troika on Thursday, on the issue of guarantors, who according to the Troika must pay the cost of the recession, since they have to bear unsecured debts, has literally created the notion of a “collapse cocktail” of any prospects of the Cyprus economy for development. Analysts commented to MAXH that if in the equation to save the banks (clearing of the balance sheets as the Troika calls it) are included the guarantors, then the social fabric will receive a major blow, similar to the “murderous” financial decision for a haircut of deposits in March 2013.

“In a small society like Cyprus with half the citizens essentially guaranteeing the other half and vice versa, the transfer of debt from the debtors to the guarantors, will create a vicious cycle of bankruptcies, it will devastated the country’s workforce and destroy any hopes for the creation of development”, noted an economist – party member, who attended the crucial meeting last Thursday.

Banks protection

What caused and causes painful impression during the presence here of the international lenders is their insistence on promoting measures to protect banks, which admittedly were the cause of the problem in Cyprus and not the symptom. Since March 2013, when citizens from their savings, without having been asked, were forced to bail out the financial institutions, up to the present, the positions-views of the Troika move on the same wavelength. Policies that suggest, even impose-promote, not primarily, but exclusive, unilateral solutions in favor of financial institutions which once again are left intact.

While recognising the problem of low rates of restructuring so far, nevertheless one cannot help but see that they use the carrot for banks and the whip for borrowers and guarantors. “There are many tools that could be used first by the Central Bank foremost and by the lenders to increase the pace of restructuring non-performing loans, which will result in settling their accounts, but they do not use them. On the contrary they use the easy solution of the dissolution of social cohesion by a punitive approach against guarantors, giving banks a second super-weapon, ie beyond that of divestitures”, said political opposition party leader with anti-memorandum rhetoric.

Puzzle of injustices

After the proposal of technocrats of Troika to meet unverified payments from guarantors, even after the restructuring of non-performing loans, was completed the puzzle of paranoid logic of international lenders that operate as the arms of Bankers, said to MAXH in a visible angry state, a prominent MP of the Left.

As other pieces of the puzzle he mentioned, he described the insistence on disposals and the right to sales of loans to investment funds, but mainly, as he noted, the issue of revaluation of property. “The fact that with the blessings of the Troika, property valuations of the banks were reduced by at least 25% of the actual value shows an intention to extend the debt gap – estimated value, after which the proposal for guarantors is interpreted as a right of the banks to claim much more than the mortgaged property. Will we lose our homes in duplicate and triplicate, with the aim to support the banks, which were and remain the great carcinoma that to a great extend caused this terrible financial and perhaps irreversible disease”, he further commented.

Government discomfort

It is worth noting though that the proposal of the Troika for guarantors, paradoxically but rightly has also caused severe distress at the technocratic echelon of the Ministry of Finance. The economic consideration of international lenders leaves on the outside the civil society, which is the most vital part of the economy and is interpreted as total insensitivity, told MAZH the chief administrative officer of the Ministry, who was not even able to assess the consequences of applying the logic of international lenders.

In any case, it is already made known that the Ministry of Finance, at a political level, is examining more balanced counter proposals, projecting as maximum political argument that any decisions should take the green light of the House parties, which since the beginning have made it known that the approach of the Troika on the issue of guarantors not only is not acceptable, but is also characterised as unacceptable.

It should be noted that according to very specific information from the third floor of the Ministry of Finance, they wants the political leadership to exact part of the responsibility from the banks (by increasing the amount that can be withdrawn from loans), so as to maintain a balance and to mediate very real concerns that financial institutions, which bear much of the blame for the crisis, are left intact and in no way have paid or will pay part of the damage.

The same sources did not preclude, if necessary, an intervention at Presidential level, in order to get the programme back on track so that in spring to open the “spigot” of lending again.