Opposition, government on collision course over insolvencies as time runs out

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By Stelios Orphanides

Cyprus may see its economic and financial reform programme once again derailed, as with the foreclosures vote three months ago, because time is running out to meet a December 31 deadline agreed with international creditors to have the insolvency legislation framework passed by the parliament.

A finance ministry official said in a telephone interview that the ministry informed lawmakers it intends to submit by December 11, two of the five outstanding insolvency bills and by year-end the other three, in a bid to meet the timeframe agreed with the troika. “We are working hard to have them ready on time,” he said.

Lawmaker and DIKO chairman Nicholas Papadopoulos said yesterday that the parliament has only two plenary sessions scheduled for the rest of the year, including that scheduled for December 18, at which next year’s budget will be voted on.

“We de facto have to note that it is not enough to have the government bills submitted, but they have to be examined by the finance committee,” he said. “Maybe by other committees as well, as these are complicated, difficult and very tough issues”.

Yesterday, euro area finance ministers approved the disbursement of a 350 million euros tranche as part of bailout funds earmarked for Cyprus which was temporarily suspended following the September foreclosure vote. Lawmakers passed the new legislation framework and a total of six laws which watered down its effectiveness.

President Nicos Anastasiades vetoed two of them which the parliament later amended and referred four others to the Supreme Court which ruled on October 31, that they were unconstitutional and thus lifted the obstacles in the resumption of Cyprus’s financing by the troika.

Opposition parties are again threatening to suspend the foreclosure legislation with two separate bills, one submitted by communist AKEL and another submitted by socialist EDEK and supported by DIKO. Both parties say that the enactment of the insolvency legislation will offer debtors a “safety net” if it coincided with the enactment of the foreclosure laws.

EDEK’s proposal provides for the suspension of foreclosures until the end of 2014, while an informal foreclosure moratorium is already in place and may have a more limited effect on Cyprus’s programme.

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About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]