EC opposes extended protection of the main residence

Brussels is not at all enthusiastic about Athens’ decision to extend the protection status for borrowers’ primary residences by another four months, according to the enhanced surveillance report issued on Wednesday by the European Commission, as it deems that it will impede the restoration of a healthy payment culture in Greece.

The same noises are being heard from the country’s creditors, who are also exerting pressure for this protection status to be terminated.

Judging by Wednesday's report, the Commission appears to be placing its hopes on the expected harmonization of the institutional framework for insolvency, to which the Greek government has committed. The report says this new framework should allow for the auctioning of main residences too.

The harmonization of the legislation regarding the insolvency of individuals is indeed among the government’s concerns; on October 30 Athens sent a “concept paper” with its ideas on the issue to the Commission.

Sources say that the Bank of Greece recently hosted a meeting with officials from the central bank, the Finance Ministry and the Prime Minister’s Office to draft a strategy for the reduction of bad loans and the return of lenders to their role – i.e. financing the economy.

This strategy provides for the application of the Hercules plan, the merging of the insolvency frameworks for households and enterprises, the promotion of the BoG plan on tackling bad loans so as to deal with the issue of deferred tax assets, and the facilitation of banks in the restructuring of their loans.

Brussels’ report argues that the out-of-court settlement mechanism has failed to meet its goal, which is the restructuring of the debts of sustainable enterprises.

The Commission further appears to be concerned about a possible new wave of retroactive claims by civil servants, ahead of a new verdict by the plenary of the State Audit Council.

The report also reveals that the next increase in the minimum wage will take place in June 2020, following a consultation process that must begin in February.