Brussels, 20/04/2015 (Agence Europe) - On Monday 20 April, the European Commission welcomed the adoption, by the Cypriot parliament, of the legal framework on insolvency, which means that the law on property foreclosures adopted in September 2014 may now enter into force.
“This is an important stage in the economic adjustment programme of Cyprus, putting an end to the political deadlock of the last six months and paving the way for Cyprus to return to a healthy implementation of the programme”, a Commission spokesperson told EUROPE.
The Cypriot parliament's vote was scheduled to take place on Friday, but the discussions overran. In the end, Saturday was the day on which a majority of 33 MPs (from the ruling party DISY, the party DIKO and the party EDEK) voted in favour of the package. The framework was introduced in September, but the opposition parties have since delayed implementation, arguing that the most vulnerable sections of the population were not sufficiently protected. As the government no longer held a majority in the national parliament, this led to a position of stalemate.
The Commission on Monday reiterated that it had stressed many times that having a modern legal framework on insolvency was important to tackle the problem of non-performing loans, “which is the main challenge for Cyprus at this time”. These loans represent more than 50% of those taken out with the Cypriot banks. The spokesperson went on to explain that the Commission would be in touch with the Cypriot authorities in the next few days for a detailed assessment of the final version of the delegated acts adopted by the parliament as regards the objectives of the Cypriot adjustment programme. “We stand ready to return to Nicosia to secure a timely completion of the review, as soon as all necessary conditions are in place”, the spokesperson said. Neither the Commission nor the ECB have been able to set a date for their return to the island to complete the mission which was broken off in early February due to a lack of progress in this area. Things could now start to move very quickly, the spokesperson said.
In a public statement following the vote, the Cypriot President, Nicos Anastasiades, said that the vote reinforced the government's efforts to return to the international markets and become entirely independent from its creditors. “It will also allow us to take part in the 'quantitative easing' programme” of the ECB, whereby public and private debt instruments will be bought back. This finally paves the way for the final tranche of its loan to be paid, Anastasiades added. Cyprus is awaiting a tranche of €80 million from the IMF from the previous monitoring mission. (Elodie Lamer)