Greece battles to defuse ticking debt bomb
Dimitris Pikrodimitris took out a mortgage four years ago when he was drawing an annual income of 27,000 ($36,720).
But the economy quickly sank into a debt crisis, forcing Greeks to tighten their belts and driving the insurance agents wages down to just 6,500 last year.
I have difficulty even making basic expenses. I havent paid the loan for the last two years, Pikrodimitris told AFP.
The number of defaulting debtors like Pikrodimitris is growing in Greece, and experts are warning that the situation could blow up and smash hopes the country can finally emerge from a crippling six-year recession this year.
Greeces central bank said that non-performing loans loans for which debtors have failed to make payments for more than 90 days are currently worth 77 billion.
Managing non-performing loans is a key challenge for banks, Yannis Stournaras, a former finance minister who is now the Bank of Greece chief, told parliament last month.
Repayment has stalled on around 30 per cent of mortgages and business loans, and around 50 per cent of consumer loans, says Victor Tsiafoutis, a lawyer offering guidance to debtors at Athens-based consumer group Ekpizo.
This is a bomb that is going to blow (and cause) a breakdown in the bank system, Tsiafoutis said. Imagine a default of 70 billion. Who is going to pay this money?
Greeces central bank said the rate of non-performing loans has risen to 33.5 per cent at the end of March from 32 per cent last year.
These so-called red loans were mostly responsible for some 600 million in combined bank losses in the first quarter of the year, it added.
The large number of non-performing loans is suppressing the process of economic recovery...