ATHENS – With more than 80 billion euros ($100.6 billion) in bad loans hindering a recovery, Greece’s coalition government will offer debtors up to 10 years to repay and removal of fines and penalties.
The plan mostly covers bad loans from businesses which also have been hit hard by a crushing economic crisis and austerity measures that have caused record unemployment and deep poverty.
Development Minister Nikos Dendias was set to meet on Oct. 1 with envoys from the country’s international lenders, the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).
The proposed regulation will provide for a common means of handling banks’ non-performing loans as well as debts to the state and social security funds while doing away with fines and penalties, allowing for the payment of debts in up to 120 tranches, according to sources.
The number of installments will be decided on a case-by-case basis, and if a debtor defaults on a tranche they will not be allowed to continue in the program but rather will face interest payments and the threat of penalties as before, Kathimerini reported.
Dendias held a meeting with Finance Minister Gikas Hardouvelis amid reports the Troika was willing to approve of the plan so that some money could be brought in although it wants to know the fiscal effect of doing away with interest and penalties.
The basic principle of the plan is for a voluntary agreement between creditors and debtor for the extrajudicial arrangement of debts.
Small enterprises with a turnover of up to 900,000 euros per year and up to nine employees will secure the automatic involvement of the state in the plan if their crediting banks agree to participate.