IMF punishes Cyprus for delaying foreclosures by withholding €88mn bailout tranche

© AFP

The International Monetary Fund has postponed the allocation of €88 million credit assistance to Cyprus over the suspension of a new foreclosure law.

The move came after the Cyprus parliament decided to delay putting the foreclosure law into practice. The new legislation would speed up the procedure of banks seizing property from people unable to pay back loans.

The introduction of the law in September was a condition for further credit assistance to Cyprus. It has been put back to January 30, 2015.

"Following today's suspension of the existing legislation on foreclosure, critical requirements for the completion of the fifth program review are now no longer met," the IMF said in a statement. "We look forward to continued cooperation, and will agree with the authorities on the next steps in the period ahead."

Every quarter representatives of the so-called 'Troika' of lenders (European Union, the European Central Bank, and the IMF) visit the island and give recommendations on receiving the next tranche of aid.

The EU and the IMF agreed in March 2013 to provide €10 billion to Cyprus provided it carried out a number of strict measures on restructuring banks, the public sector, and balancing the budget.

Cyprus has received €5.77 billion of the promised €10 billion.

The country plunged into economic crisis in 2012 as the financial downturn in Greece spread to Cypriot banks and forced large account holders to accept reductions in the value of their deposits.

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