EFSF reserves right to call in Greek loans
The eurozone’s rescue fund, Greece’s largest creditor, said on Friday it reserved the right to call in 130.9 billion euros in debt ahead of schedule after Athens defaulted this week on an International Monetary Fund loan.
The board of the European Financial Stability Facility decided to reserve its rights to act at a later stage on the outstanding loans to Greece, an EFSF statement said.
The decision was announced two days before Greeks vote in a referendum on whether to accept bailout terms rejected by their leftist government.
European officials have said a “no” vote could lead to the country’s exit from the eurozone.
The EFSF’s chief executive, Klaus Regling (photo), made the recommendation rather than the two other options – waiving the debt or demanding immediate repayment, which would have forced eurozone governments to take large losses.
“This event of default is cause for deep concern,” Regling said in an EFSF statement.
“It breaks the commitment made by Greece to honor its financial obligations to all its creditors and it opens the door to severe consequences for the Greek economy and the Greek people.”
On June 30, Greece failed to pay 1.6 billion euros due to the IMF, a non-payment which could “constitute an event of default for certain EFSF loans,” the EFSF said in a statement on July 1.
[Reuters]
