ESM nod for IMF repayment

The European Stability Mechanism (ESM) issued its approval on Thursday for the second early loan repayment by Greece to the International Monetary Fund, worth around 3.3 billion euros.

The boards of directors of the ESM and the European Financial Stability Facility (EFSF) agreed to waive the mandatory early repayment obligation of ESM/EFSF loans in connection with the second early repayment to the IMF that Greece is planning, the ESM announced.

“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 program countries Ireland, Portugal and Cyprus, who have repaid their IMF loans ahead of schedule,” stated Klaus Regling, ESM managing director and EFSF CEO.

“The ESM and EFSF are Greece’s long-term partners, 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,” Regling added.

On February 8, the government had 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 (around 65% 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.