On Monday 28 October, the euro area’s temporary (EFSF) and permanent (ESM) rescue funds officially waived their right to early repayment by Greece, which will prepay €2.7 billion in loans to the International Monetary Fund (IMF) (see EUROPE 12327/2).
The assistance from the EFSF and ESM funds in Athens provides that an amount proportional to the total financial assistance granted shall be repaid to the European Rescue Funds when Greece anticipates a repayment to the IMF. If this contractual clause were applied, Athens would have to repay €52.2 billion to the EFSF and ESM funds.
“Greece’s early partial repayment to the IMF will be beneficial for both Greece and the ESM. It will generate savings as Greece can now finance itself on the market at a lower cost compared to the cost of servicing the tranche to be repaid to the IMF. This will improve Greece’s debt sustainability and should be positively perceived by financial markets”, said Klaus Regling, Executive Director of the ESM, in a statement.
At the beginning of October, Greece issued three-month government debt at negative interest rates. (Original version in French by Mathieu Bion)