World Economy

Greece Offers Debt Forgiveness to Its Poor

Greece Offers Debt Forgiveness to Its PoorGreece Offers Debt Forgiveness to Its Poor

Greece's government on Wednesday offered debt forgiveness to thousands of individuals and companies that owe the state money, hoping to secure a fraction of arrears.

Junior finance minister Nadia Valavani said debtors offering to pay a minimum of €200 upfront could see a cut of up to 50 percent on the rest of their debt, AFP reported.

Valavani said that debts to the Greek state had ballooned to €76 billion ($86b) in unpaid taxes and social insurance contributions. But realistically, just €9 billion from that total can be recovered, she added.

"The money that can be demanded and recovered is just €9 billion, or just 11.6 percent of the total," Valavani said.

Greece's own debt to private bondholders and the three institutions supporting the country financially since 2010 - the EU, IMF and the European Central Bank - is around €320 billion.

Valavani said the radical left Syriza government that came to power last month needs money for its plans to help thousands of Greeks left destitute by the economic crisis and austerity cuts. "Without income, the required social policy cannot be promoted," she said.

The government has pledged to spend €2 billion on immediate poverty relief, and is in critical talks this week with the EU for temporary loan assistance.

Valavani insisted the debt breaks were cost-neutral, as the state was earning hardly any money from the current debtor framework.