Kastanidis noted that municipalities are obliged to have balanced budgets from January 1, 2012 so that their debts do not burden the state deficit. He stressed that the budgets must be truly balanced, since previously municipalities had written on their books loans that had been asked for but not approved by banks, some of which were never approved.
Having a balanced budget will be a condition in order for a municipality to qualify for a loan from the Consignment Deposits and Loans Fund, provided this is approved by the committee set up by the ministry to monitor the programme.
A second measure concerns the ability of municipalities to settle overdue debts with private interests, which from 2012 can only write on their books the part of the debt that is settled and not the entire debt.
A third measure allows the payment of municipality debts in installments.
The minister explained that there were two versions of the overhaul programme, the first for muncipalities with serious debt problems and a second for municipalities with minor financial issues that can be settled using a loan from the Consignment Deposits and Loans Fund.
Municipalities in the first category may have to take additional measures, such as a freeze on new hiring, transfers of existing staff and spending cuts.
A total of 70 municipalities will enter the two programmes, while only 15 are considered to have serious debt problems requiring further measures and for them the programme is obligatory.
Staff transfers will be obligatory in municipalities that don't have balanced budgets but are also a possibility in municipalities without acute financial problems but a surfeit of staff. Transfers will be between neighbouring municipalities or within the limits of former prefectures.
The implementation of the programmes will be for five years, amounting one municipal or regional term.