Greece managed this week to prepay loans worth 5.3 billion. euro from the first bailout program within the eurozone, reported "Euronews".
ΠThe cancellation of debt, which was originally supposed to be paid off by 2031 or even the 2040s, represents a positive step in the country's long-term efforts to stabilize public finances.
Coordinated by the European Commission (EC), the payment is a clear sign that Greece is paying off less and less of the debts incurred during the country's financial crisis, as well as reducing the burden of future interest payments.
The Greek Loan Facility (GLF) was the first emergency rescue instrument created within the framework of the eurozone, in a period when a permanent mechanism for assistance did not yet exist. It was established before the creation of the European Stability Mechanism and in parallel with other correction programs during the long crisis in the eurozone.
ΠIn 2010, Greece lost access to the financial markets, and this mechanism prevented an immediate bankruptcy of the country and limited the risk for the other EC member states.
According to Greek media, the early repayment of this debt will save about 1.6 billion euros in interest payments until 2041. Through the direct reduction in future budget expenditures, the debt-to-GDP ratio is expected to on the side to fall below 120% by 2029. We will recall that for the EC countries, the requirement is that their external debt does not exceed 60% of GDP on each side.
This is particularly important for the country that has the highest ratio of public debt to GDP; in the eurozone.
Between the end of 2009 and 2018, Greece experienced a severe debt crisis, caused by years of fiscal mismanagement, large budget deficits and weak economic competitiveness.
The crisis required three international bailout programs from the EC and the International Monetary Fund, accompanied by austerity measures to economies and disease-type forms.