Greece plans to pay off some costly IMF bailout loans early

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Greece plans to pay off some costly IMF bailout loans earlyThe IMF put nearly 48 billion euros ($54.33 billion) into two first bailouts of 240 billion euros ($271.64 billion) in 2010 and 2012 as part of the Troika of the European Union-European Central Bank-IMF

With 326 billion euros ($367.42 billion) in three international bailouts not scheduled to be paid off for decades, Greek Finance Minister Euclid Tsakalotos confirmed recent reports the Radical Left SYRIZA government plans to settle early with high-interest loans from the Washington, D.C.-based International Monetary Fund.

That involves 3.4-4 billion euros ($3.94-$4.51 million) in loans at an interest rate of 5 percent, representing installments for 2019 and 2020, Tsakalotos told Thessaloniki Radio.

The savings made as a result of paying off a part of the IMF’s “very expensive” debt can be used to reduce taxes and bolster social policy, he said, with Prime Minister Alexis Tsipras on a rampage of handouts in a bid to claw his way back to power in elections this year with surveys showing he is far behind the New Democracy Conservatives he unseated in 2015.

ESM chief Klaus Regling suggested it would be “wise” for Greece to pay back early its outstanding loans with the IMF, because they are more expensive than the yields Athens currently pays in the markets on its bonds.

The IMF took part in two first rescue packages of 240 billion euros ($270.49 billion) that began in 2010 but not in a third for 86 billion euros ($96.93 billion) that Tsipras sought in 2015 after saying he wouldn’t because it came with more austerity he swore to reject but then imposed. The ESM replaced the IMF in that bailout.

Tsakalotos said the issue may be brought up at the IMF’s annual Spring Meetings on April 12-14.

The idea of an early payback earlier didn’t sit well with Germany, whose banks have put up the bulk of the bailouts and made a fortune on the interest while insisting on big pay cuts, tax hikes, slashed pensions and worker firings to make sure the banks got repaid first.

The IMF put nearly 48 billion euros ($54.33 billion) into two first bailouts of 240 billion euros ($271.64 billion) in 2010 and 2012 as part of the Troika of the European Union-European Central Bank-IMF.

The bailouts ended on Aug. 20, 2018 and while there hasn’t been a full market return, the government said it’s on a path to pay back the IMF early although the rest of the loan monies won’t be paid pack until 2060 under a debt relief deal.

The German Finance Ministry in March said it wasn’t keen on the IMF getting its money back first, said a report in the financial newspaper Handelsblatt.

“We continue to perceive with serious reservations an early repayment of the IMF,” reads a note by the ministry led by Olaf Scholz which Handelsblatt has seen, with Germany anxious it means the IMF would then take a hands-off approach to making sure reforms are met.

The paper said Tsipras can’t expel the IMF from Greece as he promised because that would require consent from the German Parliament but that paying off the agency means its envoys wouldn’t be around for crisis management of Greece’s economy.

The Bundestag will give the okay for the early repayment if the future role of the IMF is safeguarded for future assessments of the Greek economy, Handelsblatt pointed out.

Read more at thenationalherald.com

RELATED TOPICS: GreeceGreek tourism newsTourism in GreeceGreek islandsHotels in GreeceTravel to GreeceGreek destinations Greek travel marketGreek tourism statisticsGreek tourism report

 

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