Filenews 18 May 2022 - by Eleftheria Paizanos
Ways to get out of the impasse due to the 14th prerequisite - and lastly - for the disbursement of the second instalment of €85 million from the Recovery Fund will be discussed in the coming days by the parties and the Ministry of Finance. This is a milestone that had to be realised at the end of 2021. It concerns the two bills that aim to strengthen the legal framework for the management of non-performing loans and define the licensing and operation of loan servicing companies. Thorn in the approval of the bills is the amendment of ELAM, EDEK, DIPA and Ecologists, which prohibits the access of loan management companies to the data of guarantors, through the Artemis system and the Cadastre system.
The amendment was sent to the Commission, which, as we are informed, considers that it is outside the objective of reducing the volume of non-performing loans. Yesterday, representatives of the parties, in the context of a meeting of the Technocratic Committee of Parliamentary Parties, were informed about the response of Brussels.
According to the letter sent by the European Commission to the Cypriot authorities, which is held by "F", Brussels considers that with the amendment and the restrictions that will be placed on loan servicing companies, they are likely to exacerbate the problem of non-performing loans (NPLs), in relation to the current legal framework. At the same time, the EU stresses that banning these companies from accessing the data of guarantors through Artemis will be harmful to address the problem of bad loans. They also consider that they will affect the current legal framework, adding that with the access of these companies to the Cadastre database, only for the data of the borrowers, it will not be possible to properly manage the non-performing loans.
At the same time, the EU stresses that it seems preliminary that the changes promoted in the bill limit the purpose of the legislation. They also call on the authorities, before taking their final decisions, to take into account the issue of the management of non-performing loans, depending on the current legal framework. Indeed, the EU expresses its readiness to contribute to the dialogue in order to find a solution.
Moreover, the EU notes that it is important that the bill satisfactorily fulfils the reform objective of addressing the problem of NPLs, underlining that the initial bill is likely to achieve the objective, as it will contribute to strengthening existing legislation. In conclusion, the EU believes that the changes being promoted would undermine the objective of the reform.
There was a strong reaction from the parties proposing the amendment to the response they received from Brussels, since, as they argued, it was a preliminary response. In high tones they put up with the technocrats because, as they argued, they did not engage in meaningful consultation with the EU. In fact, they told the ministry that they will not withdraw the relevant amendment unless insurance safeguards are included for guarantors from loan servicing companies.
On the other hand, representatives of the ministry referred to the wrong signals given by the country due to the non-implementation of the milestones. They also warned that the non-implementation of the commitments given by the Republic to the Commission may cause a problem for the rating agencies to evaluate the country.
In an effort to bridge the differences between the two parties, it was decided that in the next ten days the Parliamentary Committee on Finance will meet in closed session to find a formula that will satisfy the government, the parties and the EU. It is not excluded that there will be meetings between technocrats and representatives of the parties that propose the amendment. In the meantime, the Ministry of Finance will re-study the party proposals, in an effort to find a common component. The Director General of the General Directorate of Development of the Ministry of Finance, Theodos Tsiolas, said that the discussion took place in a constructive atmosphere, adding that the parties have expressed the will to solve the problem.
