Cyprus bailout on track after foreclosure law passed

Cyprus's bailout agenda was back on track Saturday after parliament adopted a controversial and long-delayed foreclosure and insolvency package as demanded by the country’s international lenders.

A delay in passing the insolvency framework, seen as a safety net for vulnerable groups against property repossessions, had prompted the opposition to suspend a foreclosures law passed last year.

But after final amendments were made, ruling right-wing Democratic Rally (DISY) secured votes from centre-right DIKO and socialists EDEK to ensure the measure passed by a vote of 33-23 in the 56-member house.

International lenders are now expected back on the island to proceed with the bailout funding process.

The International Monetary Fund recently held back 86 million euro ($93 million) in bailout funds for Cyprus until the legislation was adopted.

As a result of the vote, Cyprus will also now be eligible to participate in the European Central Bank's 1.1 trillion-euro quantitative easing programme following a positive review from the lenders.

The withheld money is part of a 10-billion euro package of emergency loans that eurozone member Cyprus was forced to negotiate to avoid bankruptcy in March 2013.

The bill, which cuts the legal process for foreclosing on mortgages from years to months, has been deeply controversial ever since it was demanded by lenders under the island's adjustment programme.

Cyprus received its last disbursement of cash -- 350 million euros -- through the European Stability Mechanism in December.

Fearing people could lose their homes, opposition MPs demanded protection mechanisms for primary residences and third parties who guaranteed mortgages, and to ensure more small businesses would not go under.

The lenders said the foreclosures legislation was essential if Cyprus is to get to grips with its mountain of bad debt.

Cyprus has already carried out drastic reforms to its financial sector, winding up its second largest bank and imposing a 47.5 percent haircut on deposits above 100,000 euros at its biggest.

It has also implemented a harsh austerity programme that has contributed to the economy shrinking for 14 straight quarters.