Finance Minister Kyriakos Pierrakakis, in a recent statement, described the government’s interventions regarding private debt—which were passed last Wednesday—as a breakthrough that “breaks the vicious cycle.” In reality, the government is once again attempting to pass off as reform the management of the dead-ends that it itself has created and perpetuated for the past seven years. The measures that were passed constitute a step backward presented as a leap forward, notes PASOK’s sectoral spokesperson, Ms. Milena Apostolaki, in a statement.
As she points out, “First, regarding the judicial provisions of Law 3869/2010, the government is not taking any political initiative. It is obligated to comply with the binding decision of the Plenary Session of the Supreme Court. The decision was neither an advisory opinion nor an invitation to consult with banks and servicers. It was a judicial ruling that clearly determined the method for calculating installments, the monthly interest rate, and the retroactive application from the date the law was enacted. The government neither enacts nor grants the “retroactive effect” of the decision. Retroactivity is a self-evident consequence of the Plenary Session’s interpretive ruling. The decision did not create a new rule effective from the date of its publication onwards. It interpreted what had been, from the outset, the lawful method of calculating interest on decisions under Law 3869/2010. Therefore, compliance cannot be presented as a gesture of government generosity.
Second, the government and the Minister of Finance avoid addressing an extremely critical issue in their statements: what will happen to the settlement agreements that were unlawfully terminated because the debts were calculated incorrectly. It is not enough to simply correct the calculation method going forward. There must be full redress for borrowers who lost their repayment plans due to this practice. Otherwise, compliance with the court ruling will be “half-hearted,” and the injustice will remain.
Third, regarding the out-of-court mechanism, the government continues to obscure the facts. It boasts about the number of repayment plans, but fails to mention how many of them remain active, how many have collapsed, and how many debts have fallen back into default. The sustainability of these arrangements is the true measure of success, not the self-congratulatory, hyperbolic announcements.
Fourth, the new provisions for the out-of-court mechanism give even greater power to creditors. The ability to propose the liquidation of the debtor’s remaining real estate cannot be a unilateral right of the creditors. First and foremost, the debtor himself must have the right to choose which assets he can dispose of in order to preserve his primary residence.
Fifth, converting the restructuring agreement into an enforceable instrument alters the nature of the out-of-court mechanism. A tool that was supposedly established by the government in 2020 to provide a second chance is being turned into a preliminary stage of enforcement. Citizens are being forced to accept a debt and a repayment plan without any real opportunity to contest them, and if they fail to comply, they risk having nearly the entire original debt reinstated.
Sixth, the 72-installment plan for debts owed to the Independent Authority for Public Revenue (AADE) and the Single Social Security Agency (EFKA) is a limited and inadequate arrangement. It does not cover all recent debts, does not provide for a substantial reduction in the principal debt, does not take into account parallel obligations, and remains strict regarding its loss. It does not break the vicious cycle; on the contrary, it risks perpetuating it.
During the debate on the draft bill, PASOK once again presented a comprehensive framework for addressing private debt, including substantial and mandatory creditor participation in out-of-court proceedings, specific justification for rejections, transparency in the debt file, genuine protection of the primary residence, a repayment plan of up to 120 installments for debts owed to the tax authorities, social security funds, and municipalities, as well as a special, unseizable business account for companies, professionals, and farmers.
The government is not breaking the vicious cycle of private debt. It manages it through public relations and perpetuates it through inequality. For us, success means increasing the number of sustainable debt relief arrangements, effectively protecting primary residences, and restoring the balance between citizens and creditors. This is the true scope of responsibility. And in this area, the government will not be judged by what it says, but by what it has failed to resolve. And reality is unforgiving.”