By Stelios Orphanides
DIKO chairman Nicholas Papadopoulos said that he sees no need for his party to revise its decision in the near future after it decided to reject a draft bill that would set up CyTA Ltd, required for the successful completion of Cyprus’s adjustment programme, even as Cyprus’s borrowing costs are again on the rise.
“CyTA has nothing to do with that,” he said in a telephone interview on Tuesday. “It’s that we have the highest non-performing loan ratio which continue to rise and are not declining. In addition, we have the highest private-debt ratio worldwide”.
DIKO, he said, already submitted proposals that would help reduce the banks’ huge stock of non-performing loans, which the government dismissed. Papadopoulos proposed in October, the month before the parliament passed the bill on the sale of loans, the establishment of a ‘bad bank’ that would remove non-performing loans from the balance sheet of banks, as well as a revision of the March 2013 eurogroup bail-in decision in favour of depositors.
His proposals also included that a borrower -or a guarantor- would have the right to buy a loan at an equal or lower discount to which it was offered to an investment fund by the lender.
Papadopoulos dismissed the notion that a rejection of the CyTA bill, which would set up a government-owned company to take over the operations of the Cyprus Telecommunications Authority as part of the privatisation plan agreed with international creditors, would lead to a further rise of Cyprus’s borrowing cost, once investors begin to factor in Cyprus’s failure to successfully complete its programme when it expires in March.
He said that the government under Nicos Anastasiades was responsible for the delay in the reform process, as a result of not timely submitting a draft reform legislation including on the introduction on a national healthcare scheme.
On January 14, finance minister Harris Georgiades said that he asked lawmakers to speed up the debate of reform legislation pending for months at parliament.
In the absence of parliamentary majority, the government has relied in the past on votes from DIKO to pass reforms required by Cyprus’s cash-for-reform programme.
“There is no chance that these reforms can be passed in a month,” Papadopoulos, said adding that the government did this “on purpose” so that reforms will not pass in time.
Papadopoulos said that he does not believe that this legislation, including the CyTA bill, can be passed before March, when Cyprus’s programme phases out, or before May, when parliamentary elections are scheduled.
The yield of Cyprus’s 10-year bond at the secondary market rose to 3.83 on Tuesday which is 348 basis points above those of respective German securities.
