The political alliance that pushed Cyprus’s tax reform through parliament looks set to regroup around foreclosures legislation, with DISY and DIKO expected to back each other’s bills as Finance Minister Makis Keravnos rules out any blanket freeze on repossessions.
DISY president Annita Demetriou met Keravnos on Wednesday and publicly aligned herself with his position that social policy is the responsibility of the state. Demetriou said the parties could not risk the stability of the economy and the financial sector, and called for the foreclosures legal framework to be modernised. During the meeting, the conservative DISY also raised the reinstatement of the Rent-Against-Instalment scheme.
The two opposition parties are set to cooperate on pushing through their respective proposals. The DISY bill strengthens protections for guarantors, while the centre-right DIKO bill would allow the Supreme Court to appoint specialist judges to handle matters including loan amounts, outstanding balances and abusive contract clauses. With EDEK, DEPA and independent MPs co-signing the DISY bill, its passage is effectively secured.
However, the government has not clearly accepted either bill, with legal and constitutional concerns identified in both. The Central Bank, the Banks Association and credit acquisition companies have all objected, while the Judicial Service — a key actor in implementing the specialist judges proposal — has registered its opposition to the DIKO bill specifically.
Both parties are expected to show their hand on Thursday at an extraordinary session of the parliamentary Finance Committee. The session, originally planned behind closed doors, will be held in open session with both the Finance Minister and the Central Bank Governor in attendance to respond to the DISY-DIKO formula. The new alliance may also provoke a reaction from other parties, which want their own legislative proposals put to a vote before parliament dissolves in April.
Keravnos on Wednesday made clear that a blanket discussion of foreclosures and any freeze was not appropriate at this time. He said decisions had to be reasonable and must not create further problems, noting that rating agencies, the European Union, the IMF and other institutions were monitoring Cyprus. He repeated his call for the Financial Commissioner’s legal framework to be strengthened so that disputes could be resolved without putting the Cypriot economy at risk.
The Finance Ministry on Wednesday sent two bills to the Law Office for legal-technical review. The first introduces a new mechanism for debt verification and sets out repayment procedures, strengthening the existing processes of the out-of-court financial dispute resolution body and bringing insolvency advisers into the process. Borrowers would gain additional time and would be able to approach the Commissioner earlier — upon receiving a Type “I” letter rather than the current Type “IA” letter. If no agreement is reached on restructuring or repayment, the borrower could turn to an insolvency adviser for a personal repayment plan.
The second bill would make the Financial Commissioner’s decisions on financial disputes of up to €20,000 binding. The government considers this will address the substance of the issue, benefiting both creditors and debtors.
The bills are not expected to reach parliament before its dissolution, a delay that has drawn criticism from parties who accuse the government of moving too slowly.
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