BUSINESS

Creditors said to be examining blocking early IMF loan payment

EIRINI CHRYSOLORA

TAGS: Finance, Economy

Greece's European creditors may postpone a decision allowing the country to pay off an expensive chunk of its debt to the International Monetary Fund unless the government curtails promises of handouts and sticks to its post-bailout commitments, sources have told Kathimerini.

According to reports, creditors are concerned about a planned reduction of primary surplus targets from 3.5 percent of gross domestic product to 2.5 percent for the 2020-2022 period announced as part of a contentious relief package by Prime Minister Alexis Tsipras last week, which may be seen as a violation of the country's commitments.

On Friday, Bloomberg reported that creditors are “open to sanctioning the country for a potential breach of debt obligations over a proposal to lower its annual primary surplus.”

Sources with knowledge of the discussions told Kathimerini on Monday that the option of blocking Greece's payoff of a chunk of its IMF loans is also on the table.

Greece plans to repay 3.7 billion euros owed to the IMF this year and next. The interest rate on the loans is 5.13 percent, compared with an average 1.4 percent on EFSF and ESM funding or the 3.45 percent on its recently issued five-year bond and 3.875 percent on its latest 10-year bond, according to Reuters.

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