Bad private dues outsize GDP

The overdue debt owed by Greeks to the state and financial institutions – i.e. banks and funds – is more than the country’s gross domestic product, reaching 224.2 billion euros.

These debts are divided between public and private sector entities as follows: €105 billion is owed to the tax authorities, accounting for 47%; €46 billion to social security bodies, representing 21%; €11.7 billion to banks, representing 5%; and €61 billion to funds managed by servicers, an amount that represents 27% of the total overdue private debt.

This amount, which exceeds Greece’s GDP, does not include the current debt of businesses and households, which amounts to €113.2 billion, raising the total amount of debts to €337.4 billion.

The out-of-court mechanism is a key tool for settling overdue debt, and according to data from the General Secretariat for Private Debt Management, 12,025 arrangements had been made for debts to financial institutions and the public for a total of €4.36 billion in initial debts until December 2023.

Last year, successful arrangements and new application submissions reached record numbers, a fact that, according to the Ministry of National Economy, reflects the dynamism of this particular tool that is significantly used by debtors and contributes substantially to the management and reduction of private debt. From the report of the last six months, it stems that an average of 950 arrangements per month are provided through the tool, while the continuous interest is also reflected by the rate of launching new applications on the platform, which exceed 3,500 every month.

Based on the latest progress report for December 2023, €18 billion in debt is on track for settlement. Most applications concern citizens with debts in the range of €50,000-200,000. From the analysis of the arrangements, it appears that 45% of the arrangements for debts to financial institutions receive a haircut of more than 30%, while for debts to the state, the corresponding rate of applications that receive a haircut of more than 30% is 33%.