Greece widens debt repayment plan to 120 installments

The scheme covers debts to the tax office and EFKA, Greece’s social security agency, and is expected to be open for applications in November, with a deadline for joining until June 30, 2027. A legislative amendment is due in parliament by the end of October. The government’s bet is that a broader, more flexible framework will draw in debtors who stayed out of the 72-installment program because it excluded 2024 liabilities, required all newer debts to be settled in 24 installments and offered no principal relief.

For investors, the significance is twofold. First, a larger and more workable repayment program should improve collection rates for the public sector over time, which is relevant in a country where debt sustainability remains a watchpoint for bondholders and ratings-sensitive markets. Second, the policy reduces the risk that a large stock of arrears continues to drift outside the formal system, a drag on household consumption, small-business liquidity and the broader tax base.

The financial logic of the new terms is straightforward. A 7,000-euro debt would translate into a 77-euro monthly payment under 120 installments, versus 116 euros under the 72-installment plan. For a 55,000-euro obligation, the monthly charge falls to 606 euros from 908 euros. That easing comes at the cost of higher total interest, with the applicable rate held at 5.85%, but the lower monthly bill is likely to matter more for stretched debtors deciding whether to re-enter the system.

The government is also allowing those already in the 72-installment program to move to the 120-installment schedule for the remaining balance and to incorporate arrears verified through Dec. 31, 2024. Debtors already on the 24-installment plan for 2024 liabilities will be able to shift those debts into the longer arrangement as well, provided they also regularize newer obligations. That makes the policy less punitive than the previous setup, which automatically pushed many delinquent taxpayers out of the scheme if they could not keep up with fresh liabilities.

Still, the program is not a giveaway. Debtors must have filed income tax returns for the past five years, cannot have unresolved post-2024 debts outside a lawful arrangement and will lose the settlement if they miss two consecutive monthly payments. That keeps the scheme focused on repayment discipline rather than outright amnesty, a balance likely designed to blunt criticism that repeated installment plans weaken compliance.

The broader narrative is one of Greek policymakers trying to convert chronic arrears into manageable cash flow rather than let them remain frozen on the state’s balance sheet. If take-up is strong, the scheme could ease pressure on vulnerable borrowers while improving the state’s near-term collection prospects. If participation disappoints, it will underscore how little room indebted households and firms still have, even with a more generous timetable.