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Greece considers buying civil servants’ red loans from the banks, says Economy Minister

The Greek state is considering to buy private red loans from banks at the prices they would sell to collections companies or hedge funds. This was stated by Economy and Development Minister, Dimitris Papadimitriou, in response to a question by opposition MP, Odysseas Konstantinopoulos (PASOK).

The MP wanted to know whether statements by the political leadership of the Defense Ministry about plans to buy red loans of members of the Greek Armed Forces from systemic banks could be confirmed.

“Redemption of red loans by public institutions can bring benefits,” Papadimitriou said adding there was consideration to expand this also to other public entities. However, there should be caution not to create a deficit or to create a climate to benefit bad payers, he added.

Recently it was Defense Minister Panos Kammenos who revealed that the ministry plans to buy red loans of military personnel. Deputy Defense Minister Dimitris Vitsas stated short time after, that the 2-million-euro reserves of the Autonomous Officers’ Body will be used to buy fro the systemic banks red loans at prices the banks would sell to debts collection companies. The purchase would refer to red and green loans of the military and civilian personnel as well as of the retired officers.

Papadimitriou underlined that a legislative intervention would be necessary for such a move which will have benefits for all.

Konstantinopoulos had challenged the Minister asking whether also other ministries would buy the red loans of their personnel. He gave examples saying the Education Ministry could buy the loans of teachers, the Ministry for Agricultural Development could buy the farmers’ loans.

KTG understands that when ministries buy the loans the debtors will have to repay the loan to the ministries and not to the banks.

As it is at the level of “consideration” and Papadimitriou did not elaborate on details, it is not clear whether the amount of red loans will also be decreased as it will be bought at a cheaper than the nominal price.

So the ministries will buy the red loans of their civil servants personnel or of society groups belonging to the sphere of  their competence? In this sense, the Finance Ministry should buy the red loans of all the debtors of the Greek private sector who are not affiliated to a ministry in one or the other way.

As the ministries’ resources are tax payers’ money – taxpayers who may or may not have loans to the banks – the whole idea sounds to me like a joke from the old Soviet socialist era.

After all these years, a certain group of Greeks, the civil servants, still enjoys preferential treatment when compared to the millions of citizens without any kind of protection whatsoever.

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