Repayment could be put back
After statements by the head of the International Monetary Fund, Dominique Strauss-Kahn, and the senior board member of the European Central Bank, Lorenzo Bini Smaghi, Finance Minister Giorgos Papaconstantinou confirmed last night that there have been discussions about prolonging Greece’s repayment period for the 110 billion euros it will receive in loans as part of the memorandum agreement. Speaking on Skai Television’s «New Files» program, Papaconstantinou admitted that the issue is being debated informally but stressed that no decision had been reached as yet. The finance minister also made it clear that this would not constitute a debt restructuring. He did point out on the show that discussions have started because the country’s borrowing needs for 2014 and 2015 will be upward of 70 billion euros per year, including the expiring debt that forms part of the 110-billion-euro package granted by the eurozone and the IMF. Therefore the government is considering asking for an extension to the payment period from its lenders. At present Greece has a grace period of three years for each loan and a repayment time of another two years. Papaconstantinou argued that this could change in Greece’s favor. Sources agree that there has been no decision to date about changing the deadlines and all possible solutions are still on the table, such as turning the three-plus-two years into five-plus-two or seven-plus-two, or even five-plus-five. The significance of such a shift is great, as in a seven-plus-two scenario the load on Greece for 2015 would lighten by 43.1 billion euros. However an IMF spokeswoman suggested yesterday that «we know markets are worried about the timetable of the support package repayment. If these worries persist, there could be several alternative solutions, such as replacing short-term loans with long-term ones, prolonging payback time or an agreement on a new timetable when the existing one expires.» The original response by Germany to any extension was negative, though. «We are not in favor of extending the repayments schedule» for Greece, stated a spokesman for the German Finance Ministry, Bertrand Benoit. Papaconstantinou argued that if the deadlines are extended «it will have to be done at the appropriate moment as a reward for our efforts and not because we have failed.» For the repayment period to be extended, all eurozone parliaments will have to voice their approval along with that of the IMF.
