The Boards of Directors of European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF) have agreed to resign from the obligation to make mandatory repayment of the ESM/EFSF loans in relation to the early repayment to the lenders of the Greek Loan Facility (GLF).

Under the loan agreements of the EMF and EFSF with Greece, in the event of early repayment to other creditors, a proportionate amount of the financial assistance provided under the ESM and EFSF facilities becomes immediately due and payable. Thanks to the derogations granted today by the ESM and the EFSF, Greece will not be obliged to make an early repayment to either of the two institutions.

The waivers were granted in response to a formal request from the Greek government, which proposed an early repayment of principal payments originally due in 2026-2028 to GLF lenders of €7.935 billion. These are the loans granted to Greece under the first bailout program agreed in May 2010, which included bilateral loans from Eurozone countries and the International Monetary Fund.

“Greece continues to make important steps in its economic growth. It is one of the fastest growing economies in the EU and has returned to investment grade,” ESM Managing Director and EFSF Managing Director Pierre Gramegna said in a statement, adding: “The scheduled early repayment of GLF loans is another positive signal for financial markets and demonstrates the improvement in Greece’s fiscal position. The repayment will generate some savings for the Greek budget and will also strengthen liquidity management. These are noteworthy developments for the ESM and EFSF, which hold around 54% of Greece’s sovereign debt. Our interests are shared and we will continue to support the Greek authorities in their efforts to strengthen long-term growth and debt sustainability.”

It should be noted that Greece completed repayment of its IMF loans two years ahead of schedule in 2022 and made its first early repayment of GLF loans in 2023.