President returns to Parliament legislation on foreclosures

Cyprus President Nicos Anastasiades returned to the House of Representatives legislation voted by the plenary last week amending the law on foreclosures and widower’s pension, Government Spokesman Prodromos Prodromou has told the Cyprus News Agency.

Following this development, a meeting of the parliamentary committee on budgetary and financial affairs and parliamentary committee on labour affairs will be convened on Monday, July 29 in the morning, to review the matter. The House plenary will be in session at 1030 hours local time (0730 GMT).  

Referring to the reasons the bills voted by parliament have been returned, Prodromou said that as far as the legislation on foreclosures is concerned the bill voted by parliament intervenes on the mortgage contract’s terms on the collateral used, posing conditions after the fact, upsetting the rights protected by the contract.

Assets which are put as collateral constitute part of a contractual relationship and legislative intervention on the terms of a contract which amends the terms after the fact affects the rights of one of the two parties who form the contractual relationship, he noted.

The spokesman further pointed out that establishing a protective scheme such as “Estia” was a common wish, the implementation of which will just about begin. We should see it work in practice and if is found that there are additional needs then it should be reviewed, he added.

Prodromou continued noting that “we should not create stability problems in the financial system.” Already, he said, we have witnessed reactions by international credit agencies and we should take care so as not to create additional pressure and problems in a sector, the problems of which we are now trying to resolve.

President Anastasiades, he said, proposes that the Parliament does not insist in voting this legislation and is reserving his right to submit additional reasons about the return of the legislative texts until Monday.

Referring to the widower’s pension, Prodromou said that on the basis of the actuarial study prepared, by abolishing specific articles of the initial bill, the Parliament has put in jeopardy the Social Insurance Fund’s sustainability.

The bill provided for a gradual increase of contributions between 2024 and 2034 in accordance with the actuarial study which was prepared on behalf of the Department of Social Insurance, he noted, adding that the last increase in contributions took place in 2012.

In another development on the matter, President of Economy and Competitiveness Council Takis Clerides expressed today the opinion that the legislation on foreclosures should not have been amended, noting that the amendments would negatively impact the economy’s competitiveness.

Addressing a press conference, after having handed over to Finance Minister Harris Georgiades the council’s first report on the Cypriot economy’s competitiveness Clerides said that before such legislation is amended the matter should be reviewed carefully.

Replying to journalists’ questions he pointed out that the legislation on foreclosures and insolvency are included in the economy’s strong competitive points. If amendments to that legislative framework were to be made then in all likelihood the relevant legislation may be considered to be a point of weakness instead.

“I think that the legislation should remain as it was before the Parliament’s decision and that it should be reviewed in depth what sectors are affected by this decision or the Parliament’s proposed legislative amendments,” he said.