Minister of National Economy and Finance Kyriakos Pierakakis emphasized the government’s firm commitment to tackling private debt, stating in an interview with MEGA that ‘we have approved the largest post-crisis framework of measures for private debt.’
Addressing Decades of Legal Uncertainty
The minister specifically highlighted the new regulatory framework for borrowers covered under Law 3869/2010 — commonly known as the Katseli Law. This intervention affects over 100,000 borrowers and resolves a decade-long legal ambiguity surrounding judicial loan restructuring schemes.
Pierakakis explained that the legislation aims to provide a clear, unified framework for all stakeholders — borrowers, lenders, and courts — to prevent further legal uncertainty arising from a recent plenary decision of the Supreme Court of Greece (Areios Pagos). That ruling had triggered numerous appeals, threatening to delay implementation of existing restructuring plans.
Crucially, he stressed that the government went beyond merely implementing the court’s decision. Instead, it introduced a more substantive reform — one that extends benefits retroactively to borrowers who remain current on their payments. ‘Nowhere in the court’s decision does the word “retroactivity” appear,’ he noted, adding that the government judged it ‘unfair to apply the ruling only prospectively.’
How the New Calculation Lowers Monthly Payments
Under the revised mechanism, interest is now calculated solely on the monthly payment amount — not on the total outstanding principal. This significantly reduces the interest burden for compliant borrowers, allowing most of their monthly installment to go toward reducing the capital.
As an example, Pierakakis cited a monthly payment previously set at €731, which could now drop to €483. In this scenario, only about €1 goes toward interest, while €482 directly amortizes the loan principal.
Cost and Scope of the Measure
The total cost of the intervention is estimated at €700 million, of which €200 million relates to the retroactive application — part of which will be borne by banks.
The measure applies primarily to active borrowers under the Katseli Law who continue to service their restructured loans. It does not cover those who have already fully repaid their debts — since, as the minister clarified, no legal uncertainty remains in such cases.
Regarding borrowers who secured judicial restructuring but later defaulted, Pierakakis noted that in roughly 70% of such cases, no single installment had been paid — underscoring the importance of sustained compliance.
‘Superweapon’ Out-of-Court Mechanism
Pierakakis placed particular emphasis on the out-of-court settlement mechanism — which he described as a ‘superweapon’ against private debt. Set to become operational this autumn, the mechanism offers stronger safeguards for primary residences, deeper debt write-offs, and lower monthly payments.
To date, restructuring agreements worth €19 billion have already entered the out-of-court process. The government has also lowered the eligibility threshold for inclusion — from €10,000 to €5,000 in outstanding debt — and raised the protected income level (the ‘untouchable’ amount) from €1,250 to €1,600 per month.