Greece gets 6-yr extension on paying back loan | india | Hindustan Times
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Greece gets 6-yr extension on paying back loan

india Updated: Nov 29, 2010 21:12 IST

Greece will have until 2021 to repay its €110 billion ($145.7 billion) EU/IMF bailout loan, the country’s finance minister said on Monday.

In return, Greece will have to pay a higher fixed interest rate of about 5.8% from 5.5%, George Papaconstantinou told reporters. “The repayment, which was now until 2015, will go to 2021 ... we have a grace period of four years and a repayment period of seven years. It is very important, it opens the way to return to markets earlier than expected.”

EU sources said an informal deal to extend the repayment was reached at a meeting of euro zone finance ministers on Ireland on Sunday and that this will be detailed and formally agreed at the next Eurogroup and Ecofin councils on December 6-7. Parliaments of euro zone countries must approve the decision. “The decision has been taken to have an equal treatment with Ireland and send a message to markets,” Papaconstantinou said.

He said this would not affect Greece’s fiscal consolidation plan, which analysts warned must be rigorously adhered to.

“The repayment extension will give Greece more breathing space, it may facilitate its return to markets — it’s easier to go out and borrow €50 billion

instead of €80 billion,” said Alpha Bank economist Michael Massourakis.

Meanwhile, Germany and France declared on Monday that Europe had taken decisive action to save the euro by rescuing Ireland and laying the foundations of a permanent debt resolution system, but markets were unconvinced.

They also approved the outlines of a long-term European Stability Mechanism, based on a Franco-German proposal, that will create a permanent bailout facility and make the private sector gradually share the burden of any future default.