Omnibus debt payment plan

Finance Ministry preparing an arrangement for all arrears run up during the pandemic

Omnibus debt payment plan

The Finance Ministry is planning to introduce a new regulation for debtors hurt by the pandemic that will cover all their expired obligations, and not just those suspended during the pandemic.

The arrangement, which will not be addressed to all state debtors, may be announced shortly, so that the debtors concerned can plan ahead, but its activation is being considered for early 2022.

The payment plan will have a low interest rate and the monthly tranches could reach up to 60 or 72. The provision of a longer repayment period for lockdown debts is now deemed necessary as the sum of those dues comes to almost 10 billion euros.

The cases concerned include the section of the state loans issued with low interest (“Deposit To Be Returned”), amounting to some €5 billion, the taxes suspended since March 2020 that add up to over €2 billion, and the obligations that debtors were unable to cover.

Nevertheless the ministry has no plans to reduce those arrears in any way. Rather, it foresees offering debtors who have dropped out of previous payment plans of 100 or 120 installments amid the pandemic another chanceby reinstating them in those arrangements.

The ministry is waiting to see the details of the plans the European Commission announced regarding the shift of losses from previous years: That might lead to an indirect haircut on tax obligations, though it remains to be seen how that could apply in practice in Greece and which taxpayers the measure will concern.

The debate in Greece and internationally regarding the necessity for the arrangement of debts accumulated during the pandemic – based on the argument that taxpayers are not at fault as they had to suspend their business activities – has generated significant expectations. However, the ministry intends to contain those expectations, as upon a return to normality, a return to fiscal normalcy will also be needed too, with the production of primary budget surpluses. That is reflected in the Fiscal Stability Plan sent to the EU.

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