The government sides with banks and vulture funds rather than with distressed borrowers

 

The European Central Bank (ECB) strips the government’s arguments on foreclosure issue

Statement by AKEL MP Aristos Damianou after the Parliamentary Committee on Financial and Budgetary Affairs

27 July 2021, AKEL C.C. Press Office, Nicosia

A little while ago we examined in the Parliamentary Committee on Financial and Budgetary Affairs the President’s referral of the draft bill amending the Transfer and Mortgage Law, which was passed by a majority in the House of Representatives and which provides for the targeted freezing of foreclosures until the end of October.

AKEL expresses its strong disagreement with the authoritarianism and considerations served with which the Anastasiades government and the ruling DISY party have handled the whole issue.

Last April and on the eve of the parliamentary elections, on the DISY leadership’s initiative, we voted in favour of freezing foreclosures until the end of July, indeed with expanded parameters and economic criteria, compared to the proposal approved at the beginning of July to apply until October 2021.

The consideration is evident. Any potential political cost to ruling DISY party had to be overcome in view of the parliamentary elections. For that reason, any legal or other problems being put forward today – we regret to note – constitute an instrumentalisation both of the Legal Service, but also others too, in the Government’s attempt to impose its own political position. In the duopoly of banks-vulture investment funds on the one hand and borrowers-guarantors on the other, the DISY Government chooses to side with the former.

At the same time, because it was preceded by a relentless scaremongering on the part of the government, even with warnings issued towards the Finance Committee and the parties, especially the opposition parties, that the government would itself appeal to the European Central Bank (ECB) specifically to denounce us for our legislative initiative. In a letter dated 20 July, which the Ministry of Finance concealed from Parliament – and we give credit to the journalist who today revealed its contents – the ECB notes in a nutshell: “in response to the Ministry of Finance, the ECB decided not to give an opinion after taking into particular consideration the fact that the purpose of the amendments that are introduced with the draft law is only to extend the extension of the foreclosure procedures until 31 October 2021”.

Subsequently, after noting with satisfaction that the Draft Bill that was to be passed was of a smaller scope than the one that was approved by DISY as well last April, the ECB concludes the following: “For as long as significant restrictions in movement remain in place aiming at controlling the pandemic in Eurozone countries, supporting an economic policy to avoid bankruptcy of adversely affected but viable companies and a significant increase in unemployment, will protect short-term financial stability.”

It is evident that even the ECB itself, to which the Ministry of Finance and the Government have appealed to, strips any of their problematic arguments. AKEL will continue the effort to restore this balance between the privileges banks – now investment funds – enjoy and the downgraded privileges of borrowers and guarantors by tabling the whole issue for discussion next September. We want to believe that we will continue to have the majority of parties in Parliament on our side in our effort.