The Minister of Finance, Mr. Kyriakos Pierrakakis, in a recent statement described the government interventions on private debt that were voted through last Wednesday as a breakthrough that “breaks the vicious cycle.” In reality, the government is once again attempting to baptize as reform the management of the dead ends that it itself created and has maintained for 7 years. The measures that were voted through constitute a retreat backwards presented as leaps forward, points out in her statement the responsible PASOK sector head Ms. Milena Apostolaki.
As she points out, “first, regarding the judicial arrangements of Law 3869/2010, the government is undertaking no political initiative. It is compelled to comply with the binding decision of the Plenary of the Supreme Civil and Criminal Court. The decision was not an opinion, nor an invitation to consultation with banks and servicers. It was a judicial ruling that clearly determined the method of calculating the installments, the monthly basis of interest accrual, as well as the retroactive application from the time the law was issued. The government neither establishes nor grants the “retroactivity” of the decision. Retroactivity is the self-evident consequence of the interpretive ruling of the Plenary. The decision did not create a new rule from its publication onward. It interpreted what had been from the outset the lawful way of accruing interest on the decisions of Law 3869/2010. Therefore, compliance cannot be presented as government generosity.
Second, the Government and the Minister of Finance avoid including in their statements the answer to an extremely critical issue: what will happen with the arrangements that were unlawfully terminated, because the debts were calculated incorrectly. It is not enough for the method of calculation to be corrected from now on. There must be full restoration for the borrowers who lost their arrangement because of this practice. Otherwise, compliance with the judicial decision will be “halfway” and the injustice will remain.
Third, in the out-of-court mechanism, the government continues to conceal the essence. It celebrates numbers of arrangements, but does not mention how many of these remain active, how many collapsed, and how many debts turned red again. The sustainability of the arrangements is the real measure of success, not triumphalist announcements of self-admiration.
Fourth, with the new provisions for the out-of-court mechanism, even greater power is given to creditors. The possibility of proposing the liquidation of the debtor’s remaining real estate cannot constitute a unilateral right of the creditors. The debtor himself must first have the right to choose which asset he can dispose of, so as to save his primary residence.
Fifth, the conversion of the restructuring agreement into an enforceable title changes the nature of the out-of-court mechanism. A tool that was supposedly institutionalized in 2020 by the Government to serve the second chance is being turned into a preliminary stage of compulsory enforcement. The citizen is led to accept a debt and an arrangement without a substantial possibility of dispute, while in the event of inability he risks finding himself faced with the revival of almost the entire original debt.
Sixth, the 72 installments for debts to AADE and EFKA are a limited and inadequate arrangement. It does not include all newer debts, does not provide for a substantial write-off of 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 reproducing it.
PASOK, in the discussion of the bill, once again submitted a comprehensive framework for addressing private debt, with substantial and mandatory participation of creditors in the out-of-court mechanism, specific justification for rejections, transparency in the debt file, real protection of the primary residence, an arrangement of up to 120 installments for debts to the tax administration, social security funds and Municipalities, as well as a special unseizable professional account for businesses, professionals and farmers.
The government is not breaking the vicious cycle of private debt. It manages it in terms of communication and reproduces it in terms of inequality. For us, success means increasing sustainable arrangements, substantially protecting the primary residence, and restoring the balance between the citizen and the creditors. This is the real field of responsibility. And in this field the government will not be judged by what it says, but by what it failed to solve. And reality is relentless.”