Finance Minister Christos Staikouras sent a letter on Monday asking the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF) to approve the repayment of the expensive part of Greece’s loan from the International Monetary Fund before it is due.
This is a 2.9-billion-euro loan that should be paid off by early 2021. It carries an interest rate of 4.91 percent, as the Finance Ministry stated yesterday. By repaying it earlier, the Greek state will save some 70 million euros. Another 5.5 billion euros is due by early 2024.
The approval process is rather time-consuming and the ministry estimates it will not be completed for a couple of months.
Staikouras informed his peers at the Eurogroup meeting last Friday and ESM head Klaus Regling welcomed Athens’ initiative at a press conference on the same day, citing that it will entail multiple benefits.
What the government is effectively requesting of the ESM and EFSF is that they resign the right to claim the early repayment of their own loans to Greece by the same quota, given that they have the same preferential rights as the IMF. However, it would have been impossible for Greece to pay off a third of its loans to the mechanism, as it is doing with the Fund.