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ESM approves Greece’s early loan repayment of €3.3billion to IMF

The European Stability Mechanism (ESM) gave the “green light” for the second early repayment of a Greek loan to the International Monetary Fund, worth around 3.3 billion euros. In an announcement, ESM said that the Boards of Directors of the European Stability Mechanism (ESM) and European Financial Stability Facility (EFSF) agreed to waive the mandatory early repayment obligation of ESM/EFSF loans in connection with Greece’s planned second early repayment to the International Monetary Fund (IMF).

“Thanks to the waiver approved today, Greece will be able to make a second early repayment to the IMF. This will have a positive impact on the country’s finances, thanks to a reduction in debt servicing costs. It will also strengthen market confidence in Greece, as it follows ESM/EFSF programme countries Ireland, Portugal and Cyprus, who have repaid their IMF loans ahead of schedule. The ESM and EFSF are Greece’s long-term partner, and we will continue to support Greece in its efforts to implement policies that enhance growth and safeguard debt sustainability – this is in our mutual interest,” said ESM Managing Director and EFSF CEO Klaus Regling.

On February 8, 2021, the Greek government sent formal requests to the ESM and EFSF proposing an early repayment of part of its outstanding loans to the IMF, amounting to approximately 3.3 billion euros (around 65 pct of the outstanding loan to the IMF). This will be Greece’s second early repayment to the IMF, after repaying 2.7 billion in November 2019.

The EFSF and ESM lending documentations contain proportional repayment provisions when parallel official sector financing is repaid ahead of schedule. Without the waiver approved today, Greece would have been obliged to make a cumulative repayment of 104.5 billion euros to the ESM and EFSF in parallel to its IMF repayment.

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