Greece’s creditors are insisting on a drastic reduction of the maximum property and income criteria for the protection of borrowers’ homes, or the exemption of corporate debts, before approving the Greek plan, sources have said.
The lenders are asking that the ceiling on bank deposits a debtor may have to be eligible for primary residence protection be dropped to 5,000 euros, from the limit of 65,000 euros that the original draft agreement provided for. Similarly they want to see the property value limit reduced to 100,000 euros from the original 260,000 euros.
The creditors’ demands were the main reason for the disagreement at Monday’s Eurogroup that led to the postponement of the disbursement of almost 1 billion euros to Athens, and to Finance Minister Euclid Tsakalotos asking for more time so that the decisions can be made at the government level.
Kathimerini understands that the government has agreed to the tightening of the property criteria, and the adoption of lower limits than those originally proposed, but that reduction has not satisfied the representatives of the European Commission and the European Central Bank. They are now insisting on even lower limits or at least the exclusion of corporate loans from the new framework.
The objective of the creditors is to see the number of borrowers that qualify for the new protection system shrink further, as they consider the figure of 180,000 debtors that would be protected under Athens’s proposal and bank estimates to be particularly high. In the creditors’ view, the government will not only protect the financially weak but also some strategic defaulters, thereby strengthening the culture against repayment.
In Brussels and Frankfurt they believe you cannot have someone with 30,000 euros in the bank – let alone 65,000 euros – claiming to be unable to pay a monthly tranche of 200 or 300 euros to spare his or her primary residence from foreclosure. That is why they are seeking a drop in the limit of bank deposits to 5,000 euros, while the government has only consented to halving the limit of the original proposal – i.e. bringing it down to around 32,500 euros.