New Debt Settlement Scenarios

The government’s election plan calls for more than 60 payments to the tax office, municipalities and social security funds.

As the debt of citizens and businesses has become a huge problem in recent months amid the energy crisis and high inflation, government financial advisers are considering introducing a new debt agreement. Apart from, of course, the need for such a measure, the main reason why the government is beginning to welcome such an initiative is the elections.

The aim of the plan is to settle debts that have gone “red” as taxpayers’ financial deadlock has risen to an incredible €113 billion after 10 years of MOUs and the coronavirus crisis. In addition to arrears to the state, the population has another headache – debts to banks, which have reached 101 billion euros, as loans, especially mortgage and consumer loans, also began to “redden” after repeated increases in ECB interest rates, which led to an increase in monthly payments on loans.

Despite the government’s assertion in previous weeks that no new debt regulation was being discussed, in recent hours Treasury officials have atypically confirmed plans for such regulation to be introduced in the pre-election period to give households and businesses a financial breathing space.

At the same time, for various reasons, the government is embarking on new emergency measures to pay off debts to the tax service and funds. The new arrangements, which are expected to be announced during the current month, will include several payments on delinquent debts that have again begun to pile up against the tax office, municipalities and social security funds. Discussions have already begun, but final decisions are expected at the end of February. The plan also provides more than 60 payments to the tax office, municipalities and social insurance funds.

The goal is for the new installment plan to go into effect in March. It will apply to debts incurred before 2023, which will need to be paid in full or entered into a fixed agreement with 24 or up to 48 installments. Discussions that took place at the government’s financial headquarters suggest that the state has financial lifelines to support many of the arrangements.

PS And why are elections not every year? So many delicious goodies are promised before the elections …

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