Eurogroup statement on Cyprus

Eurogroup statement on CyprusTHE EUROGROUP welcomes the institutions’ conclusion following the sixth review mission that Cyprus’ adjustment programme has been brought back on track.

The fiscal performance continues to be solid, the debt outlook has improved, and structural reforms are progressing in several areas.

We note with satisfaction the signs that confidence is strengthening, the economy is emerging out of recession, and the stabilization in the labour market, although unemployment remains high.

Reforms in the financial sector have progressed. After repeated delays, the legal framework establishing a new foreclosure procedure has entered into force. A comprehensive reform of corporate and personal insolvency laws has also been adopted. These developments have marked an essential step towards addressing the very high level of non-performing loans, which is a drag on restoring growth and job creation in Cyprus.

To sustain the progress achieved so far, we reiterate the importance of ensuring a full, swift and effective implementation of these frameworks.

Further action to effectively tackle the very high stock of arrears remains a key priority, with important ground to cover in the coming months, notably facilitating the sale of loans and ensuring that title deeds are transferred without delay to property buyers.

We call on the authorities to lend renewed momentum to the implementation of the fiscal-structural and structural reform agenda, including privatisation and public administration reform, in order to improve economic growth prospects and strengthen public finances, while safeguarding the protection of the most vulnerable groups.

The Eurogroup considers that Cyprus’ overall positive track record since the beginning of the macro-financial programme has paved the way to the abolition of all capital controls on transactions earlier in the year.

In view of the above, the Eurogroup endorsed in principle the disbursement of the next tranche of financial assistance to Cyprus. Subject to national procedures and formal approval by the ESM governing bodies, the ESM is scheduled to disburse EUR 100 million in mid-July. Concurrently, the IMF Executive Board is expected to decide on the disbursement of about EUR 280 million.

Unlicensed swimming pool health hazard

Huge problem with unlicensed swimming pools in PaphosUNLICENSED pools in Paphos are causing a health hazard and attracting mosquitos, according to local officials who say they are addressing the issues.

Head of the Paphos municipality public health committee, Fylaktis Konstantinides, told the Cyprus Mail that the situation was out of control.

Konstantinides said that the problem was particularly prevalent at apartment complexes in Paphos, where many owners use them only as holiday homes.

“There are many swimming pools which have not applied for a licence to operate as such. I’m referring to public pools which are classed as public pools, such as those in a block of five or six flats. This obviously excludes hotels.”

The public health committee head said the pools shouldn’t be referred to as “illegal swimming pools” but “unlicensed swimming pools.”

Konstantinides noted that many foreigners own properties used as holiday homes in the town which lie empty for most of the year and this is where problems arise.

“There often isn’t anyone available to take care of these facilities, they lie half empty, some with stagnant water and this is attracting mosquitoes.”

He added that municipality technicians have followed up a number of complaints where water had been left to stagnate and also instances where furniture and other rubbish has been thrown into the swimming pools.

He said that attempts are first made to locate the owners, but failing that, the municipality will send out technicians to the site. They have so far cleaned a number of areas in the town and made them presentable.

“We can’t leave these areas in a state like this as it’s a health hazard. There are very strict regulations governing swimming pools, such as life guards being in place. But we are only talking about the basic hygienic measures. Regular analysis of the water and logs must be kept.”

He added that stipulations regarding obtaining a licence and what is required can be complicated but that forms are available from the municipality of Paphos.

“Someone has to be in charge of each pool and to be responsible. I would urge people to come and apply for a licence. Also if residents see that the upkeep of a pool not being undertaken properly and it’s creating a hazard, to come and let us know and we will take action.”

Konstantinides said that the current law states that swimming pools shared by more than one family are considered a public swimming pool and must adhere to strict regulations including the provision of a lifeguard, separate male and female toilets, showers and footbaths.

Many apartment owners say that this is a ridiculous stance by the government, loading them with hefty costs which are unnecessary as the pools aren’t open to the public.

However, despite attempts by a number of officials and developers to add provisions to the law to classify swimming pools at apartment blocks and complexes as private and not public, as they are for use by residents and their guests, such premises are still classified as public pools.

In addition, an announcement earlier this year stating that the Interior ministry was proposing a new law which makes a distinction between private and public pools and which would also classify swimming pools into five categories, outlining specific criteria for each, has yet to come to fruition.

Pissouri residents need urgent solution

pissouri
An earlier landslip in Pissouri resulted in the demolition of a number of homes

LOCAL authorities and residents are continuing to pile pressure on the government to act quickly to stop homes from collapsing in Limnes in Pissouri, following a meeting at the end of last month.

Homeowners are facing a raft of problems due to land slippage and the local authority is warning that if immediate action is not taken, homes may not survive another winter. Damage includes cracks in interior and exterior walls, swimming pools, roads, pavements, footpaths, retaining walls, drains, water pipes and other infrastructure works.

Following the meeting, Lazros Lazarou, the community leader of Pissouri said that work to repair and extend the village’s drainage system would soon get underway; however, this will probably not fix the land slippage problem.

“We have a promise from a representative from the Limassol district office that if we continue with the drainage project, he will request financial support for these efforts from the interior ministry.”

Lazarou said that work would include replacing drainage pipes where they are not working or have been broken.

“We have asked our civil engineer to do a study to extend the drainage system to take away the water. That’s all that we can do. The cost for this project is too much for the village to pay for on its own, but this is the opinion of the experts and so we are prepared to do whatever they recommend. But there is a possibility that we could be spending money for nothing. If the earth is moving, the new pipes will be damaged again.”

The community leader said that representatives from many different departments participated in the meeting, including the geological department, the Limassol district authorities, town planning and the water authorities. A representative from the interior ministry visited two days later.

Lazarou said that the relevant departments were continuing their studies of the area but had not completed their report.

“They have asked for us to wait to give them time to finish the report for the minister. We have stressed that we have no time and we urgently need a solution before next winter,” he said.

Lazarou said that representatives visited some of the houses in the area and were aware of the severity of the problems. The community leader said that the council will undertake whatever the experts advise, although the costs may be huge and therefore the burden must be on the government.

Repairs to the damage and an extension of the drainage system, however, will get underway imminently.

Lazarou said that the council was waiting for the final government report but believes the cost of stabilising the area could run into millions.

“Obviously, this is out of reach for Pissouri council. There are around 50 houses affected and a few are very badly damaged. We know that ideally these people want to stay in their homes and that they are worrying very much.”

Antony Walker, a retired chartered quantity surveyor and expert witness, said that the damage is due to land slippage, resulting from a decade-long failure of successive authorities to provide adequate infrastructure to manage ground water, and allowing development to go ahead in the area.

He and his wife moved to Cyprus 14 years ago but have owned their five bedroom house for the last 25 years.

Walker, along with a number of other residents, is now requesting a direct meeting with Minister of interior, Socratis Hasikos to fully explain the weight of the problem and find out what financial responsibility the state will bear.

“We have written the minister a letter asking to meet him personally. People could lose their homes and these are not holiday homes, these are full time residents. One of my Cypriot neighbours bought his house only one year ago, with a twenty five year mortgage. He could be left with nowhere to live and a debt,” Walker said.

He added that homes are falling to pieces and the road has already dropped in some places by around one and a half metres. The damage is caused by land slippage, not poor standards of building construction, he said.

“As I understand, a similar problem on the other side of the village a few years ago, took three or four years between the studies and work being carried out. We don’t have that sort of time.”

Walker said that stabilisation works of that area cost around 6 million euros.

John Lamb, 85, and wife Linda moved to Cyprus from the UK 27 years ago and live close to Walker. Damage to his house is shocking and mostly occurred during a period of just six weeks. He has decided to undertake cosmetic work to make his home more habitable.

“We have house guests arriving and we have assumed that there won’t be any more serious slippage during the summer so we are carrying out some necessary works and tidying up,” he said.

Home prices fell in first quarter

Cyprus home prices fell in first quarter says Central BankTHE CYPRUS Central Bank’s Residential Property Price Index released earlier today reports that home prices fell by an average of 1 per cent during the first quarter of 2015 compared with a 2 per cent fall over the previous quarter.

The prices of houses and apartments recorded quarterly falls of 0.8% and 1.5% respectively; the lowest quarterly falls since the fourth quarter of 2012.

Year-on-year home prices fell 6.5 per cent in the first quarter of 2015, compared with 8 per cent in the previous quarter.

The housing price index recorded the largest quarterly decline in Larnaca and Limassol (1.3%) while Famagusta recorded a quarterly increase of 0.7%. Quarterly falls were also recorded in Nicosia (-1%) and Paphos (-1.2%).

The largest quarterly decline in apartment prices was in Larnaca (-4.1%), while the smallest was in Limassol (-0.8%). Apartment prices in Famagusta rose 5.1%, while those in Nicosia and Paphos fell 1.2% and 1.6% respectively.

The biggest annual drop in residential property prices during the first quarter was in Nicosia (-7.2%), while the smallest annual fall was recorded in Paphos (-1.5%). Prices in Limassol, Larnaca and Famagusta showed annual falls of 6.1%, 6.8% and 1.7%, respectively.

According to the Index residential property prices have returned to their 2006 levels; the year in which excess demand for residential loans started, which resulted in the property market overheating.

Crocodiles back on the menu

crocodileA JOINT Israeli-Cyprus venture is seeking permission to set up a crocodile park despite the controversy it stirred the last time, particularly from residents in Psematismenos and Tochni where it will probably be based.

“The last time we could not even consider it, it was not even a park; it was a front for something else,” environment department director Costas Hadjipanayiotou said.

The application by TSA Crocopark Ltd, which will be discussed by the Environmental Impact Assessment committee in the beginning of July, has reduced the number of Nile crocodiles from the original 1002 to about 170-220.

“The conclusion that came out during the last debate was that this will not be a zoo, but nothing more than a breeding farm,” the Green party said.

“Who will control the number of reptiles? Once again there will be a massacre and the business will become a breeding farm taking advantage of these poor reptiles.”

The farm will be based off the Nicosia-Limassol highway near the Choirokoitia exit.

“We also need to look at the matter of importing the crocodiles,” Hadjipanayiotou said, adding that “they told us they would bring whatever papers we needed,” apparently indicating an eagerness to comply.

The Nile crocodiles would come from Fatzael Crocodile Park in Israel which was closed down after 70 creatures escaped in 2011 causing mass panic in the area.

Residents of Psematismenos and Tochni had refused to consider the matter last year when it was discussed. Leader of Psematismenos community council Christodoulos Papachristou, said he had no concrete information for the new application and had no reaction as of yet.

“Our reaction might be extreme, mediocre or placid. It will depend on the proposals they outline.”

According to the daily Phileleftheros, an animal population registry would be created and before they are brought to Cyprus, would get an RFID chip (radio frequency identification) and would follow the international standards that regulate the RFID of animals.

At Fatzael, the surrounding lakes will be drained and the crocodiles will be fed for the duration of the three to four day trip, sprinkled with water and in suitably sized cages. They would be accompanied by a vet.

The state veterinary services would inspect the crocodiles upon arrival at Limassol port in the animal quarantine area.

An impact assessment study by Atlantis Research Organisation outlined that the positive and negative consequences of the park to nature, people, public health, the well-being of residents and the broader area need to be identified.

The report included that negative consequences should be minimised or avoided and certain codes of practice followed in South Africa and Australia that have similar facilities should be followed as should the health and safety code for visitors and staff.

Troika tightens screws on Cyprus property

Troika tightens screws on Cyprus propertyTHE SIXTH review of the Cyprus Economic Adjustment Programme sets more stringent and ambitious targets for Cyprus to achieve during the period 2015 – 2018.

The issuance and transfer of Title Deeds to those who have bought and paid for their Cyprus property is high on the list of priorities, with the latest revision of the Memorandum of Understanding (MoU) stating that:

Prior to the granting of the seventh disbursement of financial assistance, the authorities will, after taking into account comments by programme partners, present draft legislation to programme partners, that

  • ensures that property buyers who have paid the purchase price in full, will have their title deeds transferred within 6 months after their issuance;
  • puts obligations on all parties involved to ensure that the procedures releasing encumbrances and transferring the title can operate without delay and as automatically as possible; and
  • provides safeguards against abuse, inter-alia by introducing a mandatory escrow account to route all payments related to a property transaction, as well as adequate compensation for the parties involved, if available.

By end-June, the legislative measures will be adopted by the Council of Ministers.

Furthermore, the CBC will, in close cooperation with Ministry of the Interior, provide to programme partners a financial sector impact assessment regarding title transfers and lifting of encumbrances by end-June.

The authorities will propose legal or contractual standards for property sales contracts and connected loan and mortgage arrangements by end-October, as well as further legislative and administrative measures necessary to incentivize the swift transfer of title deeds by end October.

Although not a pre-condition on the release of bailout money, the bar for dealing with the Title Deed backlog has also been raised:

the title deed issuance backlog of immovable property units with title deed issuance pending for more than six months drops to less than 3,500 units by Q4-2015 (backlog refers to (i) applications, (ii) units that are eligible for the “ex-officio” issuance of title deeds, required certificates and permits). The ex-officio cases will automatically be counted in the backlog from the date the certificate of final approval is being issued by the respective Local or District Authority.

The Memorandum of Understanding (MoU) following the troika’s sixth review contains several other targets that should help to resolve planning issues, ‘hidden mortgages’ and the unacceptable bureaucratic delays in issuing Title Deeds.

(The IMF Executive Board is expected to consider approving the combined 5th, 6th and 7th reviews of the Cyprus economic adjustment programme during its June 19 meeting.)