NICOSIA — Defaulted loans are a prime economic issue for Cyprus, which since a 2013 financial crisis has seen overdue payments weigh on consumers and banks. Yet a government scheme to ease the problem has not been embraced by borrowers as hoped.

Just over 5,600 applications to the ESTIA scheme were submitted by the Dec. 31 cut-off date, about half of what authorities had expected. Of those, only 1,200 applications were complete.

That accounts for 1.7 billion euros ($1.9 billion) in bad loans, compared with the 9.8 billion euros overall saddling the banking sector – almost a third of all loans.

The sum is still not insignificant for a country like Cyprus, which has the second highest private debt level in Europe.

The government came up with the relief scheme to deal with the toughest batch of the banks’ bad loan portfolio, loans collateralized with the debtor’s home.

Those seeking help are given the chance to save their homes – with an estimated value of 350,000 euros and under – from foreclosure.

The Cypriot finance ministry said the low number of applications was possibly owed to a perception that the government would come up with a “more generous” scheme down later, though officials have repeatedly denied they would.

Another reason is a reluctance by ‘strategic defaulters’ to disclose their financial information, like their income and assets both domestic and abroad so as not to enable banks to go after them.

Some banking and government officials said that the scheme had the upshot in weeding out debtors who are purposely shirking their obligations – so-called strategic defaulters – from those who really want government help.

“We will not, and should not, protect strategic defaulters, nor should we protect those who free ride on the plight of the undeserving to protect their lifestyle by living beyond their means,” Panicos Nicolaou, the chief executive of the country’s largest bank, Bank of Cyprus, told The Associated Press.