ECONOMY

Initiatives to collect overdue debts of €3 bln to municipalities

Initiatives to collect overdue debts of €3 bln to municipalities

With the Russian invasion of Ukraine testing the resilience of the Greek economy on all levels, the government plans to introduce a series of initiatives to shield the economy, in the short and long term, starting with local authorities.

More specifically, among these initiatives is the launching a joint working group of the Central Union of Greek Municipalities (KEDE) and the ministries of Finance and Interior, to help improve the collection rate of municipalities around the country of overdue debts.

At the moment, overdue debts to municipalities amount to around 3 billion euros.

The collection rate of these revenues is extremely low and has fallen, from 5.3% in 2018 to 4.6% in 2021. Various attempts and regulations that have been implemented in previous years (2017, 2019 and 2021) have failed to yield results.

One of the main causes of the problem is the reluctance of municipalities to collect money from citizens due to the political cost this could entail.

These debts include fines for traffic violations, which are a significant part of revenues raked in by local authorities.

The Interior Ministry is seeking to tackle this problem by drawing on the experiences of other countries, such as the United Kingdom, and adapting then to the situation in Greece. 

It also foresees, at a later stage, the creation of a permanent collection mechanism.

To this end, the ministry could announce a tender so that a company would undertake the collection of debts on behalf of the municipalities so that local authorities are spared the political cost. 

What remains to be seen in the coming days is whether or not the municipalities will acquiesce to this new mechanism. 

An additional incentive could be to link funding to collection targets.