Expansion of payment plans

The Finance Ministry and the European Commission are working together on a plan for expanding favorable repayment schemes for arrears accrued during the coronavirus crisis. Sources say Athens is considering the inclusion in the 24- or 48-tranche plans of income tax and even Single Property Tax (ENFIA) arrears.

Besides the suspended tax obligations from the start of the pandemic, the idea is to include in the debt settlement plan the arrears stemming from the 2020 income tax and ENFIA payments, either in 24 interest-free installments or in 48 monthly tranches with an interest rate of 2.5%. It is also possible, if the health crisis continues to cause problems to the companies that are either shut or deemed damaged, that debts created this year will also be included in the payment scheme.

The aim, according to a ministry official, is to ensure that companies survive the onslaught of the pandemic and resume proper operation afterwards.

The current paradox is that tens of thousands of companies and freelancers in a period of deep recession have managed to avoid closure, as cheap state loans, furloughs and state coverage of social security contributions of employees have kept them afloat. When the health crisis ends and support measures are lifted, however, many enterprises will face the risk of a permanent shutdown even though the economy will go from shrink to rebound.

The government intends to assist companies’ effort to regain their footing as new obligations start piling up on top of previous ones, just as the bank loans repayment will also be resuming. It is in this context that the ministry wishes to include new income tax and ENFIA debts to the favorable plan for arrear payments.

A ministry sources did not rule out an eighth phase for the loans program known as “Deposit To Be Returned” after the reopening of the market, possibly in mid-May or early June, offering precious cash flow to companies in genuine need of support.