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The coalition government has proposed forgiving up to half of nearly 40 bln euros in bad loans incurred by small to medium-sized enterprises (SMEs), to take some strain off the sector hammered by a six-year recession.
The move, which would be the biggest restructuring of business debt owed to banks since the crisis erupted, would affect loans that have already been written off as non performing (NPLs) by the banks themselves.
The government, which submitted an amendment to a law to push through the proposal, said about 180,000 SMEs were eligible for a write-off of up to 50% of overdue debt to banks if they started making payments again.
The amendment mainly targets about 100,000 small and very small businesses that owe an average of 45,000 euros each to the banks, the government said.
“These are businesses that have been badly hurt by the crisis and survived,” outgoing development minister Nikos Dendias told reporters. “It’s our moral obligation to do that for them.”
He said the troika of international lenders from the EU and IMF backed the move, although some details still need to be worked out.
Bad loans including household and business debt have hit about 80 bln euros - or nearly half of the 182 bln euro economy - and the lenders have pushed the government to improve current plans to resolve the issue, fearing that excess debt will hold back growth.