IMF pushes for fixed loan rates for Greece

The International Monetary Fund would like eurozone countries to extend the grace period on all their loans to Greece until 2040 and their maturities to 2080 with a fixed interest rate until 2045, a confidential IMF document reads.

The document, titled “Greece: Debt Sustainability Summary Note,” is the IMF’s input into a discussion on how to restructure Greek debt to make its servicing manageable for Athens.

“The first key objective is to maintain gross financing needs well within the 15-20 percent of GDP thresholds… throughout the projection period,” the document seen by Reuters said.

The projections go as far as 2060.

“The second objective is to maintain the debt ratio on a downward path,” the document said.

To achieve that, the IMF proposes that eurozone countries extend the grace period on all their loans, meaning no payment of interest or principal, until 2040.

This would mean extending the existing grace period on the loans from the first Greek bailout by 20 years, the second bailout by 17 years and the latest bailout by up to six years.

“This is expected to reduce amortization payments by about 5 percent of GDP during 2020-2040 [from 13 to 8 percent of GDP],” the document said.

[Reuters]