EU Commission recommends again reforms, reduction of NPLs

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By Stelios Orphanides

The European Commission has again asked Cyprus to reduce the non-performing loans in the banking system, overhaul its public service, its judicial system, reform its economy, education system and healthcare by next year.The European Commission was commenting on Thursday in a statement outlining its country specific recommendations in response to the submission of the government’s stability programme last month.

Cyprus whose banking system is struggling with a mountain of non-performing loans which account almost half of the banks’ overall loan portfolio, should take measures to fully operationalise the insolvency and foreclosure frameworks and ensure reliable and swift systems for the issuance of title deeds and the transfer of immovable property rights,” the Commission said.

In addition, the island should do more to help reduce the non-performing loans stock in the system at a faster pace by amending legislation to allow “for the effective enforcement of claims and facilitating the sale of loans” and “integrate and strengthen the supervision of insurance companies and pension funds,” it said.

In its stability programme, the government said that it intended to reduce the amount of delinquent loans in the banking system by around €8bn by the end of the year from currently around €22bn. To do this, the government considered legislative changes to tackle strategic default and overhaul the foreclosure and insolvency framework, introduce a scheme to help vulnerable social groups whose ability to repay their mortgages was affected by the crisis, and the sale of the Cyprus Cooperative Bank, a process already underway.

The island should also “adopt key legislative reforms to improve efficiency in the public sector, in particular as regards the functioning of the public administration and the governance of state-owned entities and local governments,” the Commission said, one-and-a-half years after an attempt to modernise the civil service based on proposals put forward by Minister of Interior Constantinos Petrides failed to gain a majority in the parliament.
The Commission also reminded Cyprus of the need to relaunch its privatisation programme, which also failed to gain a majority in the parliament in early 2016, and to improve the performance of state-owned companies.

The island should “prioritise the implementation of key elements of the action plan for growth, in particular fast-tracking strategic investments, and take additional measures to improve access to finance for small and medium-sized enterprises,” it said.

Furthermore, the European Commission recommended that Cyprus, which is struggling with a youth unemployment rate of almost 23 per cent, to carry out reforms that will help the employment prospects of young persons with improved schools and vocational training.

The island should “complete reforms aimed at increasing the capacity and effectiveness of the public employment services and reinforce outreach and activation support for young people who are not in employment education or training,” it said.

The Commission recommended that Cyprus should also reform its education and training system by finally introducing the evaluation of teachers.

Lastly, the EU Commission said that the island should ensure that the national health system which was passed into law last year, should become fully operational in two years and to make the judicial system more efficient “by revising civil procedures, increasing the specialisation of courts and setting up a fully operational e-justice system”.

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About Author

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

  • Bunny

    ‘The European Commission has again asked Cyprus to reduce the
    non-performing loans in the banking system, overhaul its public service,
    its judicial system, reform its economy, education system and
    healthcare by next year.’

    Let’s rename the island Utopia, while we are about it!

    • A is B

      Or “its a joke”

    • Cydee

      Or ‘Hope’ or ‘All is Lost’…

  • Bilbo Bawbag

    Jackanory ……

  • JS Gost

    Weren’t these the promises we made in 2013 to get the bailout money. BTW whatever happened to money, nothing seems to have changed apart from the date.

    • Neroli

      Yes they were made….. but so? The money went on new cars for the MPs, the new ‘professional’ army, to the Coop bank?etc

  • Neroli

    They can keep asking…..

  • outbackbaz

    Mission Impossible by the sounds of it!
    If you choose to accept it (probably not)
    Then the island will self destruct within 10 years!

    • Costas

      Cyprus is home for the tobacco and e cigarette hub

    • Mike

      The Island has found ways of surviving for the last 10000 years while most other so called ‘civilised’ countries were habiting caves, grunting and hunting with spears. so the next 10 will be a breeze. Normally by being invaded by a foreign power I’ll accept but surrvive nonetheless. After all what power does the EU have other than rhetoric from bloated and overpaid beurocrats who will do nothing to jeopordise their club and by definition their positions.

  • A is B

    Of course that will all happen. It just shows how distant from reality these pen pushers are.

  • Kevin Ingham

    What did Cyprus have to address after the last bail out?- well pretty much everything.

    What have they addressed?- pretty much nothing.

    How have they gotten away with it so far?- primarily by selling dodgy passports to dodgy individuals that has made the dodgy businessmen who caused many of the problems last time round a lot of money

    Where could it possibly go wrong ?

    • Wanderer

      True, except that the last time around it were the local politicians and their buddies they appointed to banks’ boards who “invested” customers’ funds into trash like Greece’s government bonds.

  • Mist

    How polite, “asked”.

  • Cydee

    Quote “The Commission recommended that Cyprus should also reform its education
    and training system by finally introducing the evaluation of teachers.”
    With a quarter of youth unemployed this is ‘still’ an area where change is TOO slow.

  • Banjo

    The EU telling a member country how it should run its own country !!!!!!!

    This is all very good , sound and sensible advice , of course . Is anyone listening.

    • Neroli

      Our ears are closed!

  • Jim

    The EU have only themselves to blame. Conditions were made by the EU, as part of the bailout program. Cyprus did not comply, despite this, all the bailout cash was paid.
    Now that the EU have little leverage, I doubt Cyprus will give to much thought to their concerns.

  • Copernicus

    Every so often the EU Commission comes up with a wish list for its members. Not much happens since the EU Commission has other bigger fish to deal with; 1) Brexit problems 2) Migration 3) Cybersecurity and to make matters really worse Italy. Greece and Cyprus are manageable but Italy is the elephant in the room. The ECB will have to continue to buy Italian bonds to keep yields low or otherwise the banking system in Italy will collapse as the link between banks and sovereign bonds holds very well! The euro will continue to fall in coming days until there is a government in Italy that reaffirms its commitment to prudent fiscal policy; yet more wishful thinking!

    • Banjo

      Italy is the biggest and by far gravest problem for the EU , mostly because they are likely to remain members .

      • Kevin Ingham

        Oddly enough most European states (certainly their voters) want to be part of a co-operating body of European states, However most of them don’t want to be part of the supra national folly that is the EU (the main instrument of which is the Euro)

  • Stuart Muir

    Cyexit coming to a town near you soon!

    • Wanderer

      Unfortunately, not likely 🙁 No Cypriot politician have the guts to initiate a Cyexit. They are all sell-offs to Merkel and Brussels’ commie globalists.

    • Jim

      Getting into the EU was the golden egg for the Republic of Cyprus. It gave them enormous leverage in brokering an agreement with the Turkish occupied north. If no agreement is made, the republic is still seen as the rightful governance of the whole island.
      The EU has long regretted the decision to admit the republic before a settlement was achieved & would like nothing better than a Cyprus exit.
      Despite being incompetent, I doubt they are so stupid as to leave the EU.

      • Mike

        Could you point me to the statements that claim “The EU has long regretted the decision to admit the republic before a
        settlement was achieved & would like nothing better than a Cyprus
        exit.” I have never heard of such misinformation or is it just Cyprus bashing ambition. Just asking.

        • Jim

          You only need to do an internet search to find numerous cases of which I speak.
          I presume you know very well that posting links on Cyprus Mail is not allowed. However here is a small report on the matter, found after just a minute searching. There are dozens more, if you care to look.

          “Ironically enough, the EU became an important reason for Greek-Cypriots to reject the UN Plan: having safeguarded their accession as the Republic of Cyprus, the EU gave them no motive to contribute to a solution before accession.

          As a result, in May 2004, the EU witnessed the most awkward enlargement to date: the accession of a divided country. Indeed, some EU elites have subsequently regretted the decision to allow Cyprus enter the EU regardless of a solution. People in Brussels stood particularly frustrated with the Greek-Cypriots, who they did not support reunification. In the following years, the Greek-Cypriot efforts to use EU membership to secure concessions on the Cyprus issue has not always gone down well with EU partners. At the same time, circles in Brussels has became more sympathetic to the Turkish-Cypriots, who-in practise- remain outside the EU, despite favouring reunification.”

          • Mike

            Sorry but I have for years noted comments, articles, postings and clips from all and sundry to that end but never from any official EU source. All claim to be quoting from them but no document of substance from the commission or council. That aside the Annan plan was rejected for reasons to do with the continued loss of Greek Cypriot property and land disproportionate to the 18% minority the Turkish Cypriot community represented. OK fo foreigners and outsiders who have not lost their homes and lifes work but not acceptable to all that have. Arguably it may have been the best on offer but just not good enough given the occupying troop number demanded and guarantor powers of intervention. We are a sovereign state. The EU does support the TC’s, EU money is paying for infrastructure projects in the occupied areas right now. We must learn to differentiate between TC’s and illegal settlers who are Turkish nationals on Cypriot soil.

          • Jim

            You will never get the EU to come straight out & say, we made a big mistake. However, there is much informed comment stating as much, so much more than that stating how great an idea it was to admit a divided country into the EU.
            Each must form their own opinion on the matter.
            I personally think the EU, with hindsight, would not now admit the Republic of Cyprus.

  • Rory Keelan

    All valid. All correct. And all will be ignored in Cyprus.

  • Pullaard

    EU is a paper tiger. They can suggest/urge all they want but, until they stop access to funding for this that and the other project, Cyprus will hold two fingers aloft.

    • Mike

      I think you are right, we have a tendency to ignore all that we find inconvenient to us and if the EU believe anyone below the olive line will react similar to those in Northern Europe then they are living an illusion. We and the rest of us will continue to agree with them, spout whatever plattitudes are necessary to massage their ego’s then do exactly as we were going to do anyway.