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Creditors confirm prior actions

09/11/2015 10:05
During yesterday's first meeting of the heads of Troika with finance minister Xaris Georgiades, Cyprus' international creditors brought up the issue of the prior actions needed for the completion of the eight review of the economic adjustment program.

The meeting lasted about one and a half hours and was attended by the finance ministry general manager Xristos Patsalides and by high ranking technocrats who participate in the negotiations with the respective teams of the creditors.

According to information, during the meeting a review of the implementation of the programme was done and of the up to now deliberations at a technocratic level.

Mr Georgiades updated the creditor representatives as to where key issues for the completion of the review which may be the last one before Cyprus exits the memorandum, stand.

The crucial issues that were yesterday "sealed" as preconditions are the sale of loans to third parties, privatisations with the focus being on CYTA and the commercial activities of the Limassol port, as well as the adoption and implementation of legislation regarding public service reforms with the viability of the public sector payroll being at the center of discussion.

The autonomization of public hospitals and EAC's split up were also discussed.

The creditors pointed to the urgent need of strengthening banks' toolbox for tackling non performing loans through the adoption of the legislation regarding sales of loans.

The creditors pointed out during the meeting that the prolonged challenge of NPLs will have further negative consequences on the real economy and will discuss the issue in more detail at the presence of the central bank governor Xrystalla Georgadji who returned late last night from Frankfurt.

Creditors at CB for financial issues

The financial issues that are included in the economic adjustment program are expected to be brought up at today's meetings at CB of the heads of troika and the technocratic teams with the governor and high ranking CB officials.

In the framework of the deliberations at the CB the heads of troika will have a meeting with the banks association after last week's meetings of the creditors' technocrats with respective teams of Bank of Cyprus, Hellenic bank and Coops.

According to bank officials who attended last week's deliberations, although the international creditors referred to the insolvency framework as a positive step for both the banks and the loan holders, they pointed out that there are some important issues that prevent banks' efforts to effectively tackle restructurings and consequently non performing loans.

They estimate that the expected increase in the number of cases to be brought to justice necessitates the establishment of special courts otherwise as they pointed out, there will be uncontrollable delays.

They also referred to gaps in the implementation of the related legislation causing confusion.

According to their opinion the procedures are tardy causing additional administrative costs to the banks.

Regarding the issue of Swiss franc denominated loans, the creditors appear to adopt the banks' concerns that possible legislative regulation of the issue, with the banks assuming part of the loss, will affect the banks' capital adequacy.