The new bankruptcy code is the creditors’ main focus of interest, as was signaled last week in Athens by ECB Vice President Luis de Guindos.
The new bankruptcy law that the government is working on will offer incentives for the merger of companies that have nonperforming corporate loans entering a restructuring process, according to sources. The aim is to have the bill voted into law by the end of April, in line with the country’s pledges in the process of the post-bailout enhanced surveillance.
The new bankruptcy code is for the time being the main focus of interest for the country’s creditors, as was signaled last week during the visits to Athens by European Economy Commissioner Paolo Gentiloni and European Central Bank Vice President Luis de Guindos.
It has become clear that the path to the favorable examination of Athens’ request for additional fiscal leeway, however this is secured, will entail the passing of a satisfactory new bankruptcy law and the full abolition of the protection of debtors’ main residences.
The primary surplus target revision, the use of SMP and ANFA profits that European central banks made when buying Greek sovereign bonds for investments, and the smoothing mechanism transferring one year’s primary surplus overrun to the next will not even make it onto the negotiating table unless the bankruptcy law is completed. If the government wants, it could create a safety net for vulnerable households, though this would be a different proposition. Government sources say that the creditors have made it clear: “Do not carry out social policy through the banks.”
Therefore the government is preparing to take one of its most difficult steps to date and Kathimerini understands it has already made progress in processing the new bankruptcy bill. In this context it is also said to be examining the provision of incentives for mergers, in a bid to make the new law operate as a streamlining instrument for enterprises. Stressing the positive aspects of the new framework, government officials also highlight the expected increase in the value of collateral, as those assets could now be actually auctioned.
Besides the bankruptcy bill, the government will need to promote more reforms in order to secure a positive report from the creditors, first in the fifth assessment (expected on February 26) and then the sixth (in May). The most important reforms required concern the payment of the state’s overdue arrears, the national cadaster and various privatizations. Therefore the 2021-24 midterm fiscal plan will be tabled in May with two scenarios, as the issue of primary surpluses will not be clear in time.