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IMF’s Lagarde positive on early loans repayment by Greece

Managing Director of International Monetary Fund Christine Lagarde is positive to the idea that Greece repays earlier part of its loans, state broadcaster ERT TV reported on Saturday following a meeting between Lagarde and Finance Minister Euclid Tsakalotos in Washington.

the news comes just hours after reuters reported that Greece is looking to strike a deal this weekend to repay early about half of the loans it received from the IMF.

On the sidelines of the IMF and World Bank spring meetings in Washington, a senior official who asked not to be named told reuters that “the IMF repayment will be agreed on this weekend.”

The official said Germany and the Netherlands were resisting the move, worried the IMF would want to withdraw from the periodical reviews of Greek reforms by its lenders, but would not derail the move.

“They’re getting reassurances that the IMF will remain part of the review, so they’ll drop it. They’ll repay about half, between 4-5 billion (euros),” the official said.

IMF loans, issued to Greece as part of the country’s bailouts since 2010, cost Athens around 5 percent annually and are now more expensive than financing in the market, where 10-year benchmark bonds trade at around 3.3 percent .

The euro zone bailout fund, which under the rules would have to be repaid the same amount, is likely to waive this right, content with Greece’s improved debt sustainability that such an operation would produce, the fund’s chief Klaus Regling said last week.

Reuters reported on April 3 that Greece was considering a bond issue in late June to raise money for the repayment.

Greece, the euro zone’s most indebted state with a debt load equivalent to 180 percent of annual output, must repay about 9.3 billion euros of loans to the IMF by 2024.

That debt carries rates of up to 5 percent, compared to about 0.9 percent for loans from euro zone governments through the bailout fund.

Greece has received more than 280 billion euros from its euro zone partners and the IMF since 2010. It has repaid more than 15 billion euros of short-dated loans to the IMF since 2010.

Athens has a cash chest of more than 27 billion euros from money raised from markets and unused bailout loans. That amount would suffice to keep it afloat up to 2021 without raising fresh cash from markets.

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