The Governing Council of the European Financial Stability Facility (EFSF) decided to reduce to zero the margin for interest rate increases on Greece’s loans for the period between 1 January and 17 June 2022, as part of the medium-term debt relief measures agreed for the country in 2018. The value of this seventh consecutive reduction amounts to 103.3 million euros and will be returned to Greece by the EFSF.
In addition, as part of the debt relief measures, on July 15, 2022, the European Stability Mechanism (ESM), acting as a representative of the Eurozone member states and after their approval, transferred 644.42 million euros to Greece . This amount corresponds to the income earned from holdings in respect of the Securities Purchase Program (SMP) and the Net Financial Assets Agreement (ANFA).
“Greece made continuous progress in implementing reforms under the difficult conditions of the pandemic crisis and the economic impact of the war in Ukraine. The government implemented reforms related to the management of public finances, property taxation, the judicial system and the Treasury Financial Stability. The European institutions issued a positive assessment on the completion of Greece’s reform commitments in the first half of 2022. This paved the way for this tranche of debt relief measures linked to those commitments,” said the managing director ESM advisor and EFSF CEO Klaus Regling.
He added: “Greece’s progress in reforms and the imminent end of the enhanced supervision framework are signs of economic recovery and normalization of the situation in the country. Further efforts must continue, in particular with regard to financial sector policies, the clearing of arrears debts, primary health care, land registry and labor law”.
The 2% margin relates to the €11.3 billion EFSF loan to Greece (part of the second Greek programme), which was used to finance the debt buy-back in 2012. The margin was originally intended to apply to this loan from 2017 onwards. Under the short-term debt relief measures, the floating interest rate margin was reduced to zero for the year 2017. As part of the subsequent medium-term debt relief measures for Greece, the EFSF Board agreed to a conditional zeroing mechanism for the increase margin , starting in 2018. Such a reduction is possible by decision of the Board every six months until January 1, 2023, based on a positive assessment of Greece’s continued implementation of key reforms under the EMS program and compliance with its policy commitments after the programme.
The SMP/ANFA equivalent income transfer to Greece on a semi-annual basis, contingent on the country’s compliance with its policy commitments, was one of the medium-term debt relief measures for Greece mentioned in the Eurogroup statement of 22 June 2018.
The reduction in the growth margin and the transfer of SMP/ANFA equivalent income amounts represent the seventh tranche of Greece’s policy-dependent debt relief measures. The total amount of debt relief applied to all 7 installments exceeds 5.7 billion euros.