02.08.2022
President Nikos Anastasiades refused to sign and sent back to parliament three bills recently passed by the House of Representatives: two related to VAT on electricity and fuel, and the other related to the extension of the moratorium on seizure of property.
On the advice of the attorney general, the president said the three bills violated various articles of the constitution.
As for the moratorium or freeze on property seizures that Parliament voted for, Anastasiades argues that the measure is no longer temporary and, as such, risks being treated as a permanent state of affairs by both borrowers and banking regulators.
The latest in a series of extensions to the moratorium will last another three months, from August to the end of October.
The President also said that the European Commission, as well as credit rating agencies, would find the Cyprus foreclosure system inefficient and labor intensive, which in turn would affect the value of collateral and encourage banks to increase their capital reserves.
Any suspension of collection, according to Anastasiadis, for the most part protects intractable borrowers at the expense of successive debtors, creates a barrier to investment, risks downgrading the credit rating of both banks and the state, which will inevitably lead to an increase in interest rates . ultimately to the detriment of households and businesses .
The other two bills returned by Anastasiadis concern the Parliament’s initiative to curb inflation.
One, introduced by Akel’s main opposition, called for zero VAT on fuel products until the end of the year. The government estimates the loss of the state treasury at about 30 million euros. Another bill, co-sponsored by Diko and Deepa, would also eliminate VAT on electricity bills by the end of the year. The loss of public revenue from this is estimated at 45 million euros.
Anastasiades said that these two points violate the principle of separation of powers, namely that the legislature has no right to interfere in the state’s fiscal policy.
Parliament now has 15 days to decide on the president’s referral of bills – it can either accept the president’s position and withdraw the bills, or double the rate – in which case the issue will be heard by the Supreme Court.
