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EFSF decides to “reserve its rights to act upon Greece’s default”

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.

EFSF STATEMENT – published Friday afternoon:

Luxembourg – The Board of Directors of the European Financial Stability Facility (EFSF) decided today to opt for a Reservation of Rights on EFSF loans to Greece, after the non-payment of Greece to the International Monetary Fund (IMF). Following the IMF Managing Director’s notification of the IMF Executive Board, this non-payment results in an Event of Default by Greece, according to EFSF financial agreements with Greece.

In line with a recommendation by the EFSF’s CEO Klaus Regling, the EFSF Board of Directors decided not to request immediate repayment of its loans nor to waive its right to action – the other two possible options. By issuing a Reservation of Rights, the EFSF keeps all its options open as a creditor as events in Greece evolve. The situation will be continuously monitored and the EFSF will consider its position regularly.

Mr Regling said: “The EFSF is Greece’s biggest creditor. This event of default is cause for deep concern. It breaks the commitment made by Greece to honour its financial obligations to all its creditors, and it opens the door to severe consequences for the Greek economy and the Greek people. The EFSF will closely coordinate with the euro area Member States, the European Commission, and the IMF on its future actions.”

The EFSF loans concerned are €109.1 billion under the Master Financial Assistance Facility Agreement, €5.5 billion under the Bond Interest Facility Agreement and €30 billion under Private Sector Involvement Facility Agreement.

The Greek non-payment has no influence on the EFSF’s capacity to repay its bondholders. Investors know that EFSF bonds benefit from a robust guarantee structure.

The EFSF Board of Directors is composed of deputy finance ministers and senior officials of each EFSF Member. It is chaired by Hans Vijlbrief, Treasurer-General at the Ministry of Finance of the Netherlands.

source: EFSF

The European Financial Stability Facility (EFSF) was created as a temporary crisis resolution mechanism by the euro area Member States in June 2010. The EFSF has provided financial assistance to Ireland, Portugal and Greece. The assistance was financed by the EFSF through the issuance of bonds and other debt instruments on capital markets.

PS well… the EFSS could have decided on one of the other two options, especially the one saying “to request immediate repayment of its loans.”

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7 comments

  1. Hmmm… I thought the IMF said Greece had not defaulted and is merely in ‘arrears’? I understand it is ‘squeaky-bum’ time for the IMF and the EU and they hate the thought that anyone could criticise their motives and actions thru a referendum. Yet, why are they playing so hard on Tsipras? Millions of voting Europeans across the European Union are watching these surreal events unfold as we all edge closer to Sunday’s Greek referendum. The same people who vote these politicians into office who then go onto the Eurogroup must be asking themselves over and over…what planet are the troika on??
    Maybe it IS time for Greece to walk away from the Eurozone and European Union and its debt-for-life stranglehold it is wilfully imposing on all Member States?

    • Ellis,

      The Greek debt is first of all a problem of the Greeks and to a lesser extend a problem of the EU.

      There are many people in the EU that see that the debt is not sustainable. However they are fed up with the Greek attitude that see everywhere the problem except by theirselves.

      Take Romania as example. Almost every week some high level person goes to jail for corruption. Ukraine is fast advancing in e-government.

      That creates sympathy and unlocks money.

  2. Victoria 04/07/2015 13.50
    [link]
    & so on
    The headlines read
    Greek Prime Minister Alex Tsipras ‘ready to quit’ is they lose vote.
    First – is it true ?
    If so – well, well, well.
    When you promise one thing & do another look how things go horribly wrong.
    Who will take over ?
    Will they declair Martial Law ?

    • keeptalkinggreece

      no MLaw, the EU will bombard us with Mozzarela-Gemista.
      Had you read some posts here Tsipras’ speeches for example, you would have known if true or not

      • I don’t read Greek very well so & it is hard to get truth in news from mainstream.
        And Australian news id timid to say the least.
        So I rely on English – sorry.

  3. Please know that the austerity that is being enforced upon you is also being enforced upon us.
    It is in fact ASSET STRIPPING.
    The worlds power brokers have become impatient for their kingdom to come in the land of milk & honey, so they stepped up the procedure, = the 2008 GFC = send them all broke & we will continue from there.
    The Great Depression of the 20’s – 30’s was also a deliberate Asset Stripping exercise.
    Thr banks control the guns & there by it is their finger on the ultimate button.
    Boom Baby Boom.
    Stay cool everyone Greece has been through much worse & came away standing.