Loan extension to 2018 so far…

The recent events in Ireland are causing rapid developments on the repayment issue of the Troika loans to our country. The urgent meeting of finance ministers of Europe has decided to set the loan agreement with Greece on a new basis, extending the repayment period of the 110 billion lent to our country.

Only six moths after Greece signed the Memorandum agreement, the EU rushed the message to the international markets (as underlined by Commissioner Olli Rehn) that the Eurozone is able to secure stability in the region, and that the gun pointing at Greece is on «the table» again, relieving the pressure from the amassed debt by State bonds.

“The extension for loan repayment given to Greece will be examined at once so that it will be similar to that given to Ireland” he mentioned characteristically. If Ireland does get to repay the 85bil euro loan by 2018, it is expected that Greece will get an extension of at least 3 years. Olli Rehn stressed that this way, we will have the opportunity to repay the Troika loans without threatening the country’s stability.  

Moreover, this decision seems to give Ireland a chance to decrease its deficit to 3% of its GDP until 2015, instead of 2014 which is the case with our country, a fact that does not necessarily ensure a corresponding time extension for Greece, since it entered the program 6 months earlier.

These developments, officials say at the Ministry of Finance, are a “reward of the measurable results of our country’s efforts over the past year”. And they stress the fact that Ireland will be borrowing at a 1% higher interest rate than Greece.
 
But will the bonds calm down?

In any case, it seems that the pressure towards the Greek State bonds brought on by the intense dispute on whether Greece will be able to repay in 2014-2015, is calming down too, as the sinking funds were reaching the 145 bil euros, due to the concurrence of old bonds by institutional investors, but also to the sum of the Troika loans, amounting to 110bil euros.

Of these 145bil euros, 77,5 are expired old bonds and 67,5 are the expirations from the Troika loans.

The problem that the ministry of Finance and Troika had to solve was about how they will satisfy these borrowing needs, because in this case the support mechanism won’t be needed since the markets will cover the needs.

And given that the IMF head, Dominique Strauss Kahn, had opened the extension opportunity window, the European ministers of Finance were quick to announce their own decisions and not let the "bogeyman" of Washington be a favorable interlocutor of our country from its partners.

Olli Rehn revealed indeed that it was the European Commission's proposal to have a redistribution of loan charges in Greece.