The initiatives announced yesterday significantly expand the scope of the out-of-court settlement mechanism and the level of protection for tens of thousands of debtors, emphasized the Minister of National Economy and Finance, Kostis Chatzidakis, in an interview today on the MEGA television network.

Mr. Chatzidakis highlighted, among other things, the doubling of income criteria required for a borrower to be included in the out-of-court settlement mechanism, which is mandatory for creditors. He also stressed that before proceeding with an auction, a creditor will be obliged to offer a settlement proposal to the debtor, giving them a final opportunity to reach an agreement. “It is not necessarily in the creditors’ interest to proceed with auctions. That’s why thousands of bilateral settlements have been made, and private debt has dropped from €92 billion in 2019 to €67 billion,” noted Mr. Chatzidakis. Regarding complaints about creditors refusing to negotiate with debtors, the minister reminded that in December 2023, a law was passed requiring funds—something that should have been obvious but wasn’t—to provide continuous updates to debtors, with penalties for non-compliance. “Any borrower who can’t find a way forward can turn to the relevant authorities. The situation isn’t perfect, but it has definitely improved,” he stressed. He also noted that improvements to the out-of-court settlement parameters in 2023 led to an 81% increase in settlements in 2024. “We now have €10 billion in debts included in the mechanism, and 30,000 of our fellow citizens have already benefited,” he said.

When asked about loans in Swiss francs, Mr. Chatzidakis stated: “Loans in Swiss francs are a pan-European issue. Most countries haven’t done anything about it. Here, the Supreme Court has ruled—despite the appeals that were made—that it was a risk borrowers took. On our part, we are looking at what has been done in some European countries and talking to the banks to find a solution that is both fair and realistic—one that will provide some relief to borrowers. Further discussions are still needed with the banks, the Bank of Greece, and the European Central Bank.”

The minister clarified that no single solution has been implemented across all countries that have taken action on this issue, as loan conditions and banking system capacities vary. He concluded:

“What borrowers need to know is that, for the first time, discussions are taking place on a relief intervention, which we aim to implement within the first half of 2025.”

Regarding the incorporation of EU directives on VAT, Mr. Chatzidakis noted that the possibility of reducing VAT rates on specific products and services already existed under current legislation, and since 2019, the government has utilized this option in 23 different cases. The warning letter sent to Greece, as well as several other countries, concerns technical VAT issues, and compliance with the directive is a given.

“The deadline was December 31, and of course, we will comply,” the minister noted, adding: “What does this compliance entail? Some measures are mandatory and have little significance for society or the Ministry of Finance, while others are optional, within the framework of adopting a European VAT agreement. There is a misunderstanding that the government, by not yet complying with the directive (which it obviously will), is somehow preventing VAT reductions. But we can reduce VAT under the existing framework—and we have. Since 2019, we have implemented 23 different VAT reductions: Public transport fares from 24% to 13%. Ferry tickets from 24% to 13%. Airline tickets from 24% to 13%. Taxi fares from 24% to 13%. Movie tickets from 24% to 13%. Various healthcare-related products from 24% to 6%. Packaged coffee from 24% to 13%. Non-alcoholic beverages from 24% to 13%. Baby products from 24% to 13%. Construction VAT has been reduced to 0%. Animal feed from 13% to 6%, among others.”

When asked why the government is not reducing VAT on food, the minister responded: “We implemented all these reductions because they aligned with social priorities. When food VAT was reduced in Spain, Portugal, and even in Greece in the past, the savings did not reach consumers but were absorbed by intermediaries. Our priority this year, independent of the VAT directive, is reducing direct taxes. This is part of our broader effort to combat tax evasion, which we believe will generate significant additional revenue. If all goes well, the Prime Minister will be able to announce direct tax cuts in September—cuts that will directly benefit taxpayers. People don’t care whether they get the money from their right pocket or their left pocket—as long as they get it. And with our approach of cutting direct taxes, they definitely will.”