9 billion euros for the extension of Greek loans, a German institute argues
9 billion euros for the extension of Greek loans, a German institute argues
The Institute for Economic Research in Munich made its calculations for the countries that have concluded bilateral loans based on information broadcasted by Bloomberg
The Ifo Institute for Economic Research in Munich estimates the losses of States that have concluded bilateral loans with Greece at 9 billion euros, if the cut in the interest rate and the extension to 50 years of the maturity of Greek loans is applied, according to reports from Bloomberg.
"The projected further easing of lending terms for the 52.9 billion euros - by lengthening the repayment period to 50 years and reducing the interest rate to zero (and hence the costs of loans with an interest rate corresponding to that of Euribor) - will lead to further losses of about 9 billion euros for European creditors,» Ifo said.
IT adds that this amount is calculated as the current value of the reduced revenue from interest and from the extension of the repayment period based on a discount rate of 1.5%, which corresponds approximately to the average interest on a German bond in 2013.
The losses for Germany
Germany, the Institute says (which through its director Professor Hans-Werner Sinn has placed itself repeatedly in favor of the temporary exit of Greece from the Eurozone – is taking part in these loans at 29%, so its deficit is likely to increase by 2.5 billion were it to be calculated on an actuarial basis.
It also says that according to the plans of the Federal Ministry of Finance, the country's borrowing for 2014 amounted to 6.2 billion euros.
"The projected further easing of lending terms for the 52.9 billion euros - by lengthening the repayment period to 50 years and reducing the interest rate to zero (and hence the costs of loans with an interest rate corresponding to that of Euribor) - will lead to further losses of about 9 billion euros for European creditors,» Ifo said.
IT adds that this amount is calculated as the current value of the reduced revenue from interest and from the extension of the repayment period based on a discount rate of 1.5%, which corresponds approximately to the average interest on a German bond in 2013.
The losses for Germany
Germany, the Institute says (which through its director Professor Hans-Werner Sinn has placed itself repeatedly in favor of the temporary exit of Greece from the Eurozone – is taking part in these loans at 29%, so its deficit is likely to increase by 2.5 billion were it to be calculated on an actuarial basis.
It also says that according to the plans of the Federal Ministry of Finance, the country's borrowing for 2014 amounted to 6.2 billion euros.
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