IMF team visits Cyprus to scrutinize solvency law

An International Monetary Fund team of experts is visiting Cyprus to scrutinize the Cypriot solvency law.

A reliable source told CNA today that the team arrived in Cyprus yesterday and will meet all stakeholders for one week, in a bid to scrutinize the Cypriot solvency law and provide recommendations for amendments.

The team is on the island following the conclusion of the second review of the Cypriot adjustment programme. Amid the continued economic downturn, the main source of concern over the Cypriot banking sector is the rise of the Non-Performing Loans, estimated at 30% of total loans until March 2013.

The Troika (European Commission, IMF and European Central Bank) believes that legal obstacles to the seizure of property pledged as collateral should be limited to encourage viable borrowers to pay their loans and avert "strategic defaults". Troika officials note they are not in favour of mass-scale seizures of primary residences.

The memorandum stipulates that the administrative hurdles and the legislative framework currently constraining the seizure and sale of loan collateral will be amended in such a way that the property pledged as collateral can be seized within a maximum time-span of one and a half years from the initiation of legal or administrative proceedings.