Greece is considering the repayment of an additional 2 billion euros of its dues to the International Monetary Fund, on top of the 2.7 billion euros it repaid last month.
Finance Minister Christos Staikouras referred to the matter while speaking to Reuters on Wednesday, but without specifying the amount to be repaid. He did however say that “the new early repayment should be up to a certain amount that would allow the IMF to keep its presence in Greece until the end of the post-program surveillance period.”
Bond market sources say that the Greek planning provides for the payment of debts of 2 billion euros maturing in 2021.
That would again require the approval of the European Stability Mechanism, though this time it might be harder as the average interest rate of the IMF loans concerned is 1.9 percent, against the 4.9 percent interest on the loans paid off in November – therefore the early repayment may not appear quite so necessary.
Greece will be asked to prove that the bonds it will issue to finance the payment will have a lower interest rate, as was also the case with November’s repayment. Therefore it cannot finance the payment with 30-year bonds that would bear an interest rate of 2.8 percent, the same sources noted.
As things stand at the moment, Greece has no need to issue any bonds to finance its requirements in 2020. However, the Public Debt Management Agency believes that the issues will be necessary because, as Staikouras told Reuters, Greece has to interact with the markets.
With the reduction in the issue of treasury bills, which has already started, and the possible early repayment of the IMF, some space will be created for new issues of negotiable debt and the short-term refinancing risk will be reduced.
Athens is targeting the further reduction of rolling T-bill issues by 4 billion euros next year, after a decline from 15.2 billion to 12.6 billion euros.
The outstanding balance of loans from the IMF comes to about 5.5 billion euros. The reason it cannot be repaid in its entirety is that many countries, led by Germany, want the Fund to participate in the post-bailout monitoring for the time being, which is ensured if some of the loans have not yet been repaid.