The euro zone’s rescue fund, the European Stability Mechanism (ESM) agreed October 28 to allow Greece to pay back earlier some of its debt to the International Monetary Fund (IMF).

The move concerns loans worth around Euro 2.7bn ($2.58bn) and will allow Athens to reduce its debt-servicing costs, because IMF loans carry higher interest than Greece would now pay on the market.

The decision followed a Greek government request to the ESM in September to repay some of its loans to the IMF, which were worth about Euro 9bn. “Greece’s early partial repayment to the IMF will be beneficial for both Greece and the ESM,” said the fund’s chief, Klaus Regling.

Greece, cut off from the markets during the sovereign debt crisis of 2010-2015, borrowed heavily from the IMF and euro zone governments.

Under the loan agreements Greece has negotiated with its euro zone lenders, the early repayment of Euro 2.7bn of debt to the IMF would have triggered proportional payment of Euro 52.2bn to the ESM and its predecessor, the European Financial Stability Facility, if the EU had not waived the obligation, reports Reuters.

– Filed: 2019-10-29