Debt crisis over?
Greece repays last IMF debt ahead of schedule
4/5/2022 2:54 p.m
The International Monetary Fund lent Greece more than 30 billion euros during the debt crisis a good ten years ago. Athens is now transferring the last installments much earlier than planned. Contrary to what the Greek finance minister announced, the chapter of the debt crisis is by no means over for the country.
Greece has repaid its entire debt to the International Monetary Fund (IMF) almost two years ahead of schedule. Monday’s repayment “closes the chapter” on the 2010 sovereign debt crisis, Finance Minister Christos Staikouras said. The country will also save 230 million euros in interest by repaying 1.85 billion euros in emergency loans early.
The heavily indebted country received more than 260 billion euros in bailout loans from the European Union (EU) and the IMF during its acute financial crisis. The IMF accounted for a little more than 30 billion euros. The deadlines for repayment to the EU institutions are considerably longer than those of the IMF. The last installments are due in 2070. The state was dependent on the aid packages because private investors only wanted to lend it money at extremely high interest rates due to the high risk of default.
Since 2018, Greece has been covering its financing needs exclusively via the bond markets again. The fact that the European Central Bank (ECB) is pursuing a zero interest rate policy and itself acts as a major buyer of government bonds helps here. Most recently, however, the yields on Greek bonds have risen to their highest level since April 2020: ten-year bonds are now yielding around 2.5 percent, compared with 0.9 percent in September 2021. This means that refinancing is becoming significantly more expensive for the state again.
Despite significant improvements, Greece still has the highest public debt in the euro zone: According to government forecasts, it will amount to 189.6 percent of gross domestic product at the end of this year – compared to 197.1 percent in the previous year and 206.3 percent in 2020.