Speaking in Parliament during the debate on the Ministry of Finance’s omnibus bill, Minister Kyriakos Pierrakakis announced the resolution of a 16-year legal uncertainty surrounding the Katseli Law — Greece’s landmark debt restructuring framework introduced in 2008 to help households and small businesses cope with mounting private debt during the financial crisis.
A Retroactive Correction for Over 100,000 Borrowers
Pierrakakis emphasized that the government is not merely implementing a recent Supreme Court Plenary decision on interest calculation methods — it is adopting a broad, automatic application of the ruling for all active Katseli Law repayment plans. This means no new lawsuits, no additional appeals, and no further administrative burden for borrowers.
More than 100,000 citizens enrolled in Katseli Law arrangements are expected to see an immediate reduction in their monthly payments. In some cases, as Pierrakakis noted, installments could drop by up to €300 per month — offering tangible relief to households that remained consistently compliant with their obligations.
Looking Backward and Forward
The core change concerns overpayments already made. Under the new provision, excess amounts previously paid will now be recognized as principal repayments — reducing the outstanding loan balance and shortening the total repayment period. In effect, the measure applies retroactively: it doesn’t just ease future payments but also corrects past imbalances for those who paid more than they ultimately owed.
Pierrakakis stressed that this retroactivity was not legally mandatory. The government could have applied the revised interest calculation only prospectively. Instead, it chose substantive redress — acknowledging years of uncertainty, delays, and inconsistent judicial interpretations that affected borrowers’ financial planning.
Cost and Responsibility Sharing
The total fiscal impact of the measure is estimated at approximately €700 million: around €500 million covers future payment relief, while roughly €200 million addresses retroactive corrections for amounts already paid.
This cost will not fall solely on the state. Banks and the state-backed ‘Hercules’ asset protection scheme will jointly bear the burden — proportionally, based on the amounts each has collected from borrowers under existing Katseli arrangements.
The government also clarified that repayment plans concluded through the out-of-court settlement mechanism remain fully unaffected. Their terms, including interest rates, stay unchanged — ensuring the Katseli adjustment does not create new uncertainty for other active debt resolutions.
Part of a Broader Debt Strategy
Pierrakakis linked the reform to Greece’s wider progress on private debt. He cited data showing private debt as a share of GDP fell to 94.1% in 2024 — below the EU average of 121.4%. While the Greek text cuts off mid-sentence here, the broader context underscores the government’s aim to stabilize household finances and restore confidence in debt resolution mechanisms after years of crisis-era strain.