New plan to pay back debts

The government will submit to Parliament in September a new payment schedule for debts to the state incurred during the coronavirus pandemic.

These new debts will be paid either in 12 interest-free installments in 2021 or 24 low-interest installments. The amount of unpaid taxes and previous debt settlements that froze during the period from March to May exceeds €2 billion.

Normally, these debts would have to be settled from the end of August to October; however, debtors will now have the option of starting to make repayments in January 2021.

Given the impact of the pandemic and the likelihood of a second wave, there are calls for the new settlement to take into account any new debt created by the end of 2020. The decision will be made at the last moment, to avoid strategic nonpayment of debt in anticipation of the favorable settlement.

There is a lingering fear among Finance Ministry officials that the huge amount of overall unpaid debt, €105 billion, may grow further, especially since a recent survey has shown that four in 10 enterprises will not be able to pay their current tax or social security contributions.

Enterprises are pushing for a debt settlement in 120 installments, saying that this would be the only way to provide them with much-needed liquidity.