ECONOMY

Worries over debts amassed

worries-over-debts-amassed

The debts that Greeks owe to the tax authorities and the banks which have been frozen as part of the measures to contain the impact of the Covid pandemic on the economy add up to some 26 billion euros.

The accumulated arrears of taxpayers and borrowers puts the aim of a return to normality after the end of the pandemic at risk, as at some point they will need to be paid along with the other obligations of the time.

Alongside banks’ plans to ease borrowers back into the repayment of their dues as of 2021, with reduced tranches for some months, the state intends to allow taxpayers to pay off their dues to the tax authorities from April 2021 in 24 installments.

The new tax and social security arrears created by the payment moratorium amount to €1.509 billion.

The suspension of tax and contribution payments this year for the period of the spring lockdown forms part of the interventions both for this year and next, according to the 2021 draft budget. The question is whether taxpayers will manage to pay off this €1.5 billion next April.

Out of that amount, €906 million concerns taxes and €603 million social security contributions.

For all those debts from the March-May period, the government will submit a law amendment to Parliament allowing for their repayment as of May 2021 in 12 interest-free tranches or in 24 installments with an interest rate of just 2.5%.

The problem is bigger than that though, as households and enterprises have also been unable to meet their obligations since the lockdown. Sources say that in the next 10 days the government will announce new support measures for those hurt by the pandemic, in a bid to help them pay off their current debts.

The Finance Ministry is considering two main options for that. The first provides for the restoration to the repayment program of 120 tranches of all the borrowers who have stopped paying due to the pandemic, while the second would expand the standard plan for the payment of income tax to up to 24 monthly tranches.