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On the edge for plenary's decision

12/11/2015 10:32
The government is anxious in view of today’s session of the parliament, which will vote on the controversial bill on the sale of loans to third parties.

This bill is a prerequisite for the creditors for the eighth review of the economic adjustment program and international creditors were clear on this issue during their contacts with the leaders of parliamentary parties.

The heads of international creditors’ teams had separate meetings yesterday with the leaders of DISY and DIKO, where they emphasized that they want the bill on the sale of loans to be clear.

This position was strongly raised also in discussions with the government during the creditors’ meeting with the Minister of Finance.

Cypriot authorities know in advance that if the controversial bill is voted with major amendments the evaluation will not be completed successfully.

As executives of both parties involved in Troika meetings told StockWatch, creditors have indicated that they will not accept distortions by any amendments submitted by the parties.

They also noted the impact on banks in case this legislation does not become part of their toolbox for dealing with non-performing loans.

Non-performing loans amount to € 27 bn.

Plenty of amendments

Opposition parties do not seem to be intimidated by the creditors’ and the government’s warnings, as they are expected to submit 18 amendments at today’s plenary.

The amendment proposed by the Democratic Party is in focus as it is estimated that it may determine the adoption of the bill.

The amendment allows the affected borrower or guarantor to buy their loan.

However, international creditors oppose strongly to this amendment, because as they said it includes a moral hazard for good borrowers to stop paying their installments.

The president of DIKO explained yesterday to the lenders the reasons necessitating the adoption of this recommendation and its positive impact on the adoption of this proposal, for the broader economy.

The fact that heads of the creditors were accompanied by members of the technocratic team in their discussions with DISY and DIKO, is indicative of the importance they place on the sale of loans bills.

Both the meeting with DISY and with DIKO, exceeded the predetermined time frame which was scheduled as creditors submitted a number of questions and clarifications.

The President of DISY Averof Neophytou said yesterday after the meeting with creditors, that he and his party "are scared at the idea of a repeat of the scenario that took place in September 2014 in Greece."