Euro Lenders Allowed Greece To Pay Part Of Debt Ahead Of Schedule
The European Stability Mechanism and the European Financial Stability Facility allowed Greece to repay an expensive part of the IMF loan ahead of schedule, the Greek Finance Ministry said.
Greece on September 16 filed an application for early payment to the IMF. « At the official request of the Ministry of Finance on September 16, 2019, the European Stability Mechanism (ESM) and the European Financial Stability Fund (EFSF) agreed to abandon their repayment obligations, thereby approving the early repayment of part of Greece’s debt to the International Monetary Fund, » the message of the Ministry of Finance states.
This step is of particular importance for Greece and its economy, according to the Ministry of Finance.
« The credibility of the country is increasing, the immediate income of the Greek state is guaranteed, indicators of the stability of public debt are improving, and indirect positive effects of increasing confidence in the markets are expected, » the statement said.
Greece’s total debt to the fund is about €9.8 billion. Athens previously wanted to pay off the expensive part of the IMF loan, which is €3.8 billion. The direct benefit for the state will be about €70 million, since expensive loans are closed with an annual interest rate of 4.91%, when the current cost of loans of the Greek government for 10 years, as well as the average cost of servicing public debt, is about 1.6%.
For several years, Greece has been deprived of the opportunity to lend in the international financial markets due to the deep economic crisis. The country received loans under financial assistance programs from three international lenders in exchange for reforms and belt-tightening policies. In August 2018, Greece withdrew from lending programs that lasted eight years.
In 2018, Greece’s public debt amounted to more than €357 billion, or 192.4% of GDP.