Greece has extended the practice of early repayment of loans provided by the International Monetary Fund (IMF). According to the Greek Ministry of Finance on Monday, December 28, the early repayment process this time will affect payments that must be repaid in 2021 and 2022. In general, the country plans to return 3.6 billion euros to the IMF ahead of schedule, writes Reuters and DW.
In 2019, Greece — also ahead of schedule — paid the IMF 2.7 billion euros. If the country’s Ministry of Finance pays the currently announced amount, Greece’s total debt to the IMF will decrease by 80 percent.
According to DW, Greece’s desire to repay the IMF debts ahead of schedule is explained by the fact that these loans are considered expensive due to the high-interest rate. The early repayment of the loan allows the country to save tens of millions of euros, which must be spent on servicing the loan. In addition, such steps increase creditors’ confidence in the country, improve the public debt sustainability indices, and may indirectly positively affect the country’s credit rating. This, in turn, allows new loans to be taken at lower interest rates.
Last week, the Greek government has already announced its intention to borrow about 12 billion euros in foreign financial markets next year.
Greece has been receiving financial assistance from the structures of the European Union and the International Monetary Fund (IMF) since 2010. A third aid package of €86 billion was agreed to in 2015. To get aid, Greece had to take austerity measures, in particular, to cut pensions and the amount of annual income that is not taxed.