11/02/2015 06:03
Twenty days before the expiration of the suspension of the Law on divestments, the disputed provision of the fifth legislation of the insolvency framework regarding guarantors is still a big thorn in the agreement between the Ministry of Finance and international creditors.
International creditors insist that the guarantors should bear the burden of the obligations of the principal debtor, if he cannot meet them.
On the other side Cyprus has submitted the position that once mortgaged property is foreclosed, guarantors should be exempt from their obligations.
The issue causes new friction with creditors in addition to the legislation for divestments which has not been applied since September. As a result, the funding program of the remaining € 4 billion remains frozen.
According to a source of international creditors, consultations between the two sides on a technocratic level continue with teleconferences and email exchange regarding the issue of this legislation, concerning, in general, the primary residence.
The source noted that the gap between the two sides remains until today, despite the expectations of the Cypriot side to reach an agreement until the beginning of March.
The source expressed the hope that the right balance will be found, but also referred to other member-states’ practice in relation to the obligations of the guarantors.
The source argued that Cyprus cannot be an exception, but estimated that there may be a middle ground.
Finance Minister Haris Georgiades, said on Monday before the Finance Committee of the parliament, that the Cypriot side expects answers from Troika regarding the fifth piece of legislation.
However, Troika believes that the provision for guarantors remains a unique but serious obstacle to resolving the dispute in order to release the controversial legislation and submit the insolvency context to the parliament.
Opposition parties have not changed their position regarding the insolvency framework while even yesterday, officials of the parliamentary opposition parties, warned that they would not lift the suspension of the implementation of the Law on foreclosures if the insolvency framework along with the five pieces of legislation that will govern it, is not submitted to parliament.
International creditors insist that the guarantors should bear the burden of the obligations of the principal debtor, if he cannot meet them.
On the other side Cyprus has submitted the position that once mortgaged property is foreclosed, guarantors should be exempt from their obligations.
The issue causes new friction with creditors in addition to the legislation for divestments which has not been applied since September. As a result, the funding program of the remaining € 4 billion remains frozen.
According to a source of international creditors, consultations between the two sides on a technocratic level continue with teleconferences and email exchange regarding the issue of this legislation, concerning, in general, the primary residence.
The source noted that the gap between the two sides remains until today, despite the expectations of the Cypriot side to reach an agreement until the beginning of March.
The source expressed the hope that the right balance will be found, but also referred to other member-states’ practice in relation to the obligations of the guarantors.
The source argued that Cyprus cannot be an exception, but estimated that there may be a middle ground.
Finance Minister Haris Georgiades, said on Monday before the Finance Committee of the parliament, that the Cypriot side expects answers from Troika regarding the fifth piece of legislation.
However, Troika believes that the provision for guarantors remains a unique but serious obstacle to resolving the dispute in order to release the controversial legislation and submit the insolvency context to the parliament.
Opposition parties have not changed their position regarding the insolvency framework while even yesterday, officials of the parliamentary opposition parties, warned that they would not lift the suspension of the implementation of the Law on foreclosures if the insolvency framework along with the five pieces of legislation that will govern it, is not submitted to parliament.
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