The government’s plan for a proposal to deal with private debt in Greece was presented to the Troika yesterday by the Government Council for the Management of Private Debt. The plan, to be ready within a month and applicable by September, has an integrated approach to debt as it aims to deal with the entire public debt (eg. money owed to banks, debts to state and social security funds, suppliers and employees) to facilitate extrajudicial settlements.

The new plan will initially concern businesses and then households and will offer speed and flexibility.

Households

For households, the debt restructuring plan to help will leave leeway for daily expenses, such as food, shelter, education and entertainment, according to the socioeconomic profile of the debtor. There may be “haircuts” to debt in the case of difficulty, however the government doesn’t openly speak of debt write-offs as this is a matter for the code of the Bank of Greece.

Businesses

Debt restructuring for companies will be based on their business and financial plans. In this case, banks are to create services to evaluate each corporation’s viability to ascertain how much of the debt burden it can survive without being forced to close down. “Haircuts” to debt won’t be given, however there will be debt restructuring and relief so that they can overcome temporary cash flow problems due to the bad condition of the market (eg. delays in payment, termination of bank funding due to the crisis etc.) They will also be privy to loans given on good terms provided, of course, the problems are superficial and due to the crisis but not more deeply rooted.

During the presentation of the plan, Greece’s international creditors remained silent, however it is expected that they will talk openly about the scheme at today’s meeting with Finance Minister Gikas Hardouvelis.