The Greek Ministry of National Economy and Finance announced changes to its debt relief framework, aiming to provide stronger protection for thousands of borrowers.
The initiatives announced on 5 February 2025 expand the scope of the extrajudicial settlement mechanism and the level of protection for thousands of debtors, said Finance Minister Kostis Hatzidakis in an interview with MEGA TV.
Hatzidakis noted that income criteria for eligibility have doubled, allowing more borrowers to access the mandatory settlement mechanism. Before proceeding with foreclosure, creditors will now be required to offer a settlement proposal, providing borrowers with a final opportunity for debt resolution.
“Foreclosures are not necessarily in the creditors’ best interest. That is why thousands of bilateral settlements have already been made, and private debt has decreased from EUR 92 billion in 2019 to EUR 67 billion,” Hatzidakis stated.
Addressing reports that some creditors refuse to engage with debtors, the minister highlighted a December 2023 law requiring financial institutions to provide continuous updates to borrowers, with penalties for non-compliance. “Any borrower facing difficulties can seek assistance from the appropriate authorities. The situation is not perfect, but it has definitely improved,” he added.
Hatzidakis also pointed out that the improved parameters of the extrajudicial mechanism in 2023 led to an 81% increase in settlements in 2024. “So far, EUR 10 billion in debt has been included in the mechanism, benefiting 30,000 borrowers,” he said.
Swiss franc loans
Regarding loans in Swiss francs, Hatzidakis stated:
“This is a Europe-wide issue, and most countries have not yet taken action. In Greece, the Supreme Court has ruled—despite legal challenges—that borrowers assumed the currency risk. We are examining how similar cases have been handled in some European countries and are in discussions with banks, the Bank of Greece, and the European Central Bank to find a fair and practical solution that provides some relief to borrowers. Further discussions are needed before reaching a decision.”
He also clarified that there is no single uniform measure across Europe, as loan conditions and banking systems vary. However, for the first time, discussions are taking place on potential relief measures, with a target for action within the first half of 2025.
VAT policy and compliance with EU directives
On the integration of EU VAT directives, Hatzidakis explained that Greek law already allowed for VAT reductions on specific goods and services. Since 2019, the government has utilized this flexibility 23 times, including reductions in:
- Public transport (from 24% to 13%)
- Ferry and air travel (from 24% to 13%)
- Taxis (from 24% to 13%)
- Cinema tickets (from 24% to 13%)
- Certain public health-related products (from 24% to 6%)
- Coffee and non-alcoholic beverages (from 24% to 13%)
- Baby products (from 24% to 13%)
- Construction (VAT abolished)
- Animal feed (from 13% to 6%)
Regarding an EU warning letter sent to Greece and other countries over VAT regulations, Hatzidakis assured that compliance would be ensured. He clarified that the directive includes both mandatory and optional measures and that Greece’s VAT reductions were not hindered by non-compliance.
VAT on food and tax policy
When asked why VAT on food has not been reduced, Hatzidakis responded:
“Past reductions in food VAT—in Greece, Spain, and Portugal—did not result in lower prices for consumers but instead benefited intermediaries. Our priority this year, separate from VAT regulations, is the reduction of direct taxes. Increased efforts to combat tax evasion are expected to generate additional revenue, enabling new tax cuts to be announced by the Prime Minister in September.”
He emphasized that taxpayers ultimately care about net income, not whether relief comes through VAT or direct tax reductions. “With our approach—cutting direct taxes—it is certain that people will feel the impact directly,” he concluded.
