ATHENS – Greece’s new ruling New Democracy government wants approval from the country’s European creditors to okay the early repayment of loans owed the Washington-based International Monetary Fund (IMF) to ease its debt.
Christos Staikouras said paying off part the IMF loans ahead of schedule would reduce debt servicing costs by about 70 million euros ($77.09 million) because the loan has an interest rate of 4.9 percent and Greece can now borrow enough from the markets at rates around 1.6 percent.
Although the loans are owed to the IMF, the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) which holds most of the debt from 326 billion euros ($359.09 billion) in three bailouts that expired on Aug. 20, 2018, has to sign off on whether the IMF should get paid first.
Prime Minister Kyriakos Mitsotakis said the early repayment, for which both the IMF and Troika had voiced support, will “boost the country’s credibility” while improving the viability of its huge debt burden that’s rising by the second despite the three rescue packages that didn’t work.
Greece has repaid a large part of its IMF loans but still owes the fund about 9 billion euros ($9.91 billion.) The average interest that Greece pays its European creditors is around 1.4%.
Mitsotakis has rolled back his hope of getting the creditors to lower a primary surplus requirement of 3.5 percent of the country’s Gross Domestic Product (GDP) of 181.88 billion euros ($200.3 billion.)
The primary surplus, a bar Mitsotakis said is too high to spur a burgeoning recovery, doesn’t include interest on the debt, the cost of running cities and towns and state enterprises, social security and some military expenditures or delaying payments to those owed by the state.
(Material from the Associated Press was used in this report)