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25 June, 2024
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Cacophony emerges as Cyprus stalls foreclosure bills

Country’s image and €85 million aid in the balance as parties won't badge on bad loan guarantor protections


The finance ministry in the Republic of Cyprus is scrambling for new ways to overcome an awkward impasse on two crucial foreclosure bills, after opposition parties blamed the administration for not doing enough to have the European Commission go along with amendments to protect bad loan guarantors.

Opposition parties that sponsored an amendment aimed to protect loan guarantors reportedly heard back from the finance ministry this week that the European Commission has rejected their amendment proposal as “harmful.”

An amendment sponsored by four opposition parties -nationalist ELAM, socialist EDEK, center DIPA, and the Greens- would block credit management companies from accessing personal information of guarantors to resolve defaulted loans.

But the proposal has been holding back the approval of two crucial government-sponsored foreclosure bills that were required to fulfill Cyprus’ promises to Brussels by a December 2021 deadline. The country also risks losing €85 million from the Recovery Fund as the money has been linked to the reforms, according to government officials.

An amendment sponsored by four opposition parties would block credit management companies from accessing personal information of guarantors to resolve defaulted loans

European Union officials argue that the proposal, which would block access to personal information of loan guarantors within the Ariadni government gateway portal, would hinder companies from tackling and resolving bad loans, a necessary step as Cyprus seeks to push for reforms.

But according to Philenews, opposition parties view the Commission’s response as preliminary and have further pointed the finger at administration officials “for failing to hold effective discussion with the European Union.”

“In fact, they told the ministry that they would not withdraw their amendment to the proposed bill unless protection reassurances for guarantors are included for the loan management companies,” the daily reported.

Government officials insist the position of the parties was “sending the wrong message” that the Republic was an unreliable partner in the eyes of the Commission, adding that Cyprus could also face assessment challenges from credit rating houses.

The finance ministry is now attempting to bring stakeholders together in the next few days in order to hash out differences and find common ground, ideally a formula that could satisfy all involved - the government administration, political parties, and the EU.

A crucial House finance committee session has been scheduled to take place within the next ten days, Philenews reported.

Cyprus  |  economy  |  EU  |  foreclosure  |  reform  |  bad loans  |  legislation  |  loan guarantor

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