Debt settlement

Nearly 1,500 applications to settle debts to Greece's power utility have been filed daily since October 1, which is when the new debt installments plan went live online and also became available by telephone, sources in Public Power Corporation (PPC) reported on Monday.
The new repayment plan includes more installments and lower initial installment rates.

State debtors' keen interest in the debt settlement program in which payments can be made in up to 120 tranches has resulted in a massive drop in confiscations, official data showed on Thursday.

The tens of thousands of social security fund debtors whose applications to settle their debts were approved will see their monthly installments declining from September as an interest rate reduction from 5 percent to 3 percent annually comes into force.
Both individuals and companies can repay their debts in up to 120 monthly installments.

A total of 88,869 people owing 1.5 billion euros in social security contributions have agreed on a debt settlement schedule of up to 10 years, according to KEAO, the agency charged with collecting the debts.
The agency has already collected 97 million euros.

The two mechanisms for the settlement of debts to the tax authorities and the social security funds will be a sizable challenge for the next government. Greece's creditors estimate that the 120-tranche payment programs will create a fiscal gap of 0.6 percent of gross domestic product in the 2019 budget that risks missing the target of 3.5 percent of GDP.

The platform for applying for a debt settlement program for contributions to social security funds will open before Easter, i.e. during this month, and will remain open up to September 30.

The Finance Ministry is planning two new debt settlement plans to ease the pressure on Greece's 4.2 million state debtors, which will reportedly go into effect as of late March.

The government proposed on Friday an out-of-court settlement model to banks for the debts that individuals owe to them, which foresees the subsidization of payment tranches so as to protect the main residences of debtors who are unable to meet the requirements of their arrangements.

The new debt repayment mechanism that the government is negotiating with its creditors provides for haircuts on debts to the tax authorities and social security funds and the payment of what remains in up to 120 installments.

Greek banks are proposing that the protection limit on the objective value of debtors' main residences be reduced to 100,000 euros in the context of the Katseli law.

That would signify a drastic decline from the current level that starts at 180,000 euros and can rise up to 280,000 euros depending on the number of children in a household.