Home » News
Home » News

Cyprus passes international bailout review

Published July 25, 2014 11:47 am

Economy • European overseers warn about bad loans being a drag on growth, jobs.
This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Nicosia, Cyprus • Cyprus' international creditors said Friday that the country's bailout program is making good progress as fiscal targets have been comfortably met, welfare reform has moved forward and more steps have been taken to shore up the banking sector.

But they urged authorities to tackle the high number of bad loans that are a drag on economic growth and job creation because they keep banks from lending.

In a statement issued after the end of Cyprus' fifth bailout review, the European Commission, the European Central Bank and the International Monetary Fund said that quickly passing foreclosure and insolvency laws is key to getting borrowers to pay off debt as bad loans account for more than half of all loans.

Cyprus' banks were at the center of last year's rescue deal that shocked savers by seizing their deposits in the country's two biggest lenders.

Finance Minister Harris Georgiades said an overhaul of the current "dysfunctional" foreclosure laws by September 1st is necessary for bailout creditors to release the next batch of rescue money — $470 million from the EU and $115.5 million from the IMF — later the same month.

Georgiades said existing laws don't work because it takes over a decade for banks to collect on collateral for soured investments. A senior European Commission official, speaking only on condition of anonymity because he's not authorized to speak to the media, said a new legal framework now being fine-tuned envisions cutting that time to 1.5 to 2.5 years.

But there has been some resistance to the new law amid concerns it could cause indebted Cypriots to lose their homes. President Nicos Anastasiades personally intervened to clinch a compromise on the bill that incorporates safeguards for people who lost their jobs from also losing their primary homes.

The senior European Commission official said there's currently much more investor interest in Cyprus than expected. The economy is projected to shrink 4.2 percent this year but grow 0.4 percent in 2015.




Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
comments powered by Disqus