NICOSIA, June 20 (Xinhua) -- The long-awaited Estia scheme, which is aimed at helping low-income loan owners start repaying their debts and banks to get rid of non-performing loans totaling about 3.5 billion euros (3.95 billion U.S. dollars), is to be implemented in Cyprus as of next month, Finance Minister Harris Georgiades said here on Thursday.
He told a television station that the first payments to the banks under the scheme will start in December as originally planned.
Under the Estia scheme, about 15,000 loan owners will have the opportunity to have their loans reduced by one third, provided they will satisfy the banks and the government that they can pay regularly.
The state will subsidize the loan owners' instalments by paying one-third of their dues, to the tune of an average 25 million euros a year for 25 years.
"Beyond helping low-income loan owners repay their debt and salvage their mortgaged primary residence, the Estia scheme will also help pinpoint strategic defaulters who can repay their loans but do not do so, expecting that at the end they will be reprieved and get away with their dues," Georgiades said.
"The government is willing to improve the scheme when there is need for amendments," he added.
He said that the trustworthiness of the scheme will be tested in practice and any shortcomings will be corrected.
Non-performing loans are the most serious legacy of a crisis that hit the Cypriot economy in 2013 and led the eastern Mediterranean island into a 10-billion-euro bailout.
At the peak of the crisis, non-performing loans totaled 28 billion euros, or 52 percent of the total loan portfolio. By the end of last year, non-performing loans were brought down to about 10 billion euros, or 28 percent of total loans. (1 euro = 1.13 U.S. dollars)