Galery

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180,000 civil servants will benefit from relieved conditions for private loans taken from the mutual fund of the public sector. The decision was made after it became clear that civil servants will not escape from the reduction in public sector wages and the labour reserve measure, which will cut at least 30,000 employees form government organizations and enterprises during the next year.

Those, having loans from the mutual fund of the public sector, owe around four billion Euros. They will be able to freeze the payment of monthly installments for two years, and then will pay half of that initial monthly payment for five years. Civil servants who are nearing retirement will not make any payments until they retire. Then, the lump-sum payment for their length of service will go to repay their obligations under the loan from the state fund. If the sum is not sufficient to cover the loan, retired civil servants will only make monthly installments to pay the principal, without paying the interest. The maximum age for repaying the loan is increased to 85 years and all those who want to reschedule their payments may extend them to 10 years. This applies to mortgage loans so that borrowers can reduce the amount of their monthly installments.

All these concessions to Greek civil servants having loans come into force this week and the deadline for inclusion in the programme is 30 June 2012. Reverence to the public sector are a slap in the face of private sector employees who are experiencing the same problems with the repayment of personal loans from private banks, but cannot do anything about it. Even more provocative is that Minister of Finance Evangelos Venizelos was not satisfied with the reliefs of the mutual fund of the public sector and required private commercial banks to enforce similar conditions for loans to civil servants.

Venizelos met the President of the Greek Union of Banks, Vassilis Rapanos, to request "reasonable" concessions for indebted civil servants. At present, Rapanos is neutral and says that banks already have programmes for deferring the payments of all citizens, but some additional scenarios were discussed at the meeting. One suggestion is to freeze bank receivables of mortgage loans if the borrower is unemployed and receives a social grant from job centres. Another idea is to defer additionally the repayment of loans to no more than 12 years and the longest debt repayment term should not exceed 40 years.

Besides large and small loans, the Greeks have serious debts accumulated by the use of credit cards. To solve this issue, the option is discussed for repaying credit card debts in 24 equal monthly installments that will be exempt from interest. New incentives will be offered for repayment of consumer loans, which also cannot be serviced in the new economic conditions. A grace period of 6 to 12 months, in which only interest will be paid, is being considered for mortgage loans.