Katseli law extension to be shelved

Gov’t to opt for alternative means of protecting debtors’ main residences, befitting ‘post-crisis situation’

While the government appears to be considering extending the protection of debtors’ main residences in some form, this is not likely to be in the context of existing legislation which expires at the end of the year. Meanwhile, talks with creditors on the possibility of a fresh repayment plan for up to 120 installments have frozen.

Just over 10 weeks before the expiry of the law named after the former economy minister who introduced it, Louka Katseli, Deputy Prime Minister and Economy Minister Yiannis Dragasakis appeared unwilling to commit to the possibility of the law being extended into 2019, even if stricter inclusion criteria were introduced. One of the proposals the minister made was for banks themselves to grant a haircut on mortgages, thereby preventing borrowers from having to take recourse to justice.

“The Katseli law was the product of a crisis situation. What we need for the future is a law that would offer protection to those in need as does this one, but will also concern a post-crisis situation,” Dragasakis said. Asked whether the law will be extended, he pointed to changes introduced in the summer, placing particular emphasis on the lifting of bank secrecy.

Although this development cannot be considered definitive, it indicates the government’s position in talks with creditors in the coming months. These negotiations also include the issue of pension cuts, as well as the extension of the 120-tranche payment plan for debtors who cannot enter the extrajudicial settlement mechanism.

Talks between the government and its creditors on extending the law allowing a 120-installment payment plan, as Athens desires, will resume in December. For the time being, the negotiations have stumbled on the question of expanding the out-of-court mechanism to include salaried workers, pensioners, unemployed, self-employed professionals and businesses that have shut down, after the proposal was rejected by the creditors’ technical experts.

On a staff level Athens was reportedly told that there is no need for new extraordinary measures, as the flow of revenues into state coffers has been showing a significant improvement.