Greece Unveils Five Measures to Tackle 235 Billion Euro Private Debt

The Greek Ministry of National Economy and Finance is rolling out a series of crucial interventions aimed at tackling the substantial private debt burden, which currently stands at over 235 billion euros. These five key measures, set to be activated by the end of June, are designed to provide relief and a structured path forward for households and businesses struggling with debts owed to tax authorities, the EFKA social security fund, banks, and loan servicers.

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With household and business debts to the tax office, EFKA, banks, and servicers exceeding 235 billion euros, the Ministry of National Economy and Finance is moving forward with five targeted actions to settle private debt.

A significant focus is placed on protecting primary residences. A new regulation will allow borrowers to seek debt restructuring specifically for their main home through an out-of-court mechanism, separating it from other assets. This approach contrasts with the current framework, which considers all debts and assets. By focusing solely on the value of the primary residence, debtors can potentially secure a larger "haircut" on their debt and lower monthly installments, tailored to the property's value and their income. Other assets will still be subject to liquidation through auctions to cover remaining debts.

Furthermore, a special 72-installment payment plan for overdue debts to the tax office and EFKA is expected to launch in June. This plan applies to debts incurred up to December 31, 2023, provided that debts arising after January 1, 2024, are settled or restructured. For those with debts exceeding 5,000 euros to the tax office and EFKA, a restructuring option of up to 240 monthly installments is available through the out-of-court mechanism. This requires consent for the lifting of bank and tax secrecy for a full financial assessment, with an interest rate set at 3% and potential debt reductions under certain conditions.

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The new regulation provides that borrowers can request a settlement through the out-of-court mechanism exclusively for their primary residence, separating it from the rest of their property.

Another vital component is the establishment of a Property Acquisition and Re-leasing Entity. This body will purchase the primary residences of vulnerable debtors facing auction and then lease them back to the debtors for a mandatory 12-year period. This ensures debtors do not lose their homes and have the opportunity to repurchase them after the lease, provided they meet payment obligations and achieve financial recovery. The state will also provide housing subsidies ranging from 70 to 210 euros per month during the lease period to ensure timely rent payments. These comprehensive measures signal a determined effort by the Greek government to stabilize its economy and support its citizens through a challenging period of indebtedness.

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Within June, the new settlement process is expected to start, which can include overdue debts to the Tax Office and EFKA that were registered by December 31, 2023, and remain unsettled as of April 21, 2026.