ECONOMY

Extra boost for firms settling all their debts

Some 70,000 enterprises and self-employed professionals have applied to have their debts to tax authorities and social security funds restructured, made possible by a recently passed law. Their entry into the payment scheme opens the way for the settlement of their debts to banks, too, a process that can now start after the signing of a ministerial decision on Friday as provided by the law on corporate debt settlement.

Although the deadline for applying to enter the payment plan, which cuts debts to banks by up to 50 percent, is in March 2016, the additional incentive of the write-off of 20 percent of penalties and fines payable to the state concerns only those who apply to settle their debts to the state or the funds by March 2015.

The fact that the two debt settlement regulations are now running in parallel has created the expectation that a number of corporations will opt to use the additional write-off option and apply by March this year.

Original government estimates for 180,000 enterprises applying to have their debts restructured now seem exaggerated, but their number will likely exceed 100,000 by end-March.