The Board of Directors of the European Financial Stability Fund (EFSF) decided today to reduce to zero the increased margin accumulated by Hellas for the period between 17 June 2022 and 31 December 2022, as part of the medium-term debt relief measures agreed for the country in 2018.

The value of this eighth reduction amounts to 122.5 million euros. The Governing Council also decided to reduce the aid margin to zero from 1 January 2023 onwards. This completes the reduction of the aid margin, in the context of the medium-term Greek debt relief measures.

In addition, as part of the Greek debt relief measures, the European Stability Mechanism (ESM), acting as the representative of the eurozone member states and after their approval, will release approximately €603 million for Greece (eighth and final tranche) from the profits of the European central banks from the purchase of Greek bonds (ANFA and SMP).

“Greece has made steady progress in implementing reforms, while coping well with the challenging economic consequences of the war in Ukraine. European institutions had issued a positive assessment of Greece’s reform commitments to be completed by autumn 2022. This paved the way for this tranche of debt relief measures linked to those commitments. The total value of all medium-term debt relief measures amounts to €11.5 billion,” said ESM and EFSF CEO Pierre Gramenia.

Pierre Gramenia also added: “Thanks to the comprehensive reforms that Greece has implemented in recent years, its economy has become much more dynamic and resilient. The country exited the enhanced supervision framework and economic growth was among the highest in the EU in 2022. Responsible and sustainable fiscal policy must remain a priority and further efforts must continue, in particular in the reduction and consolidation of non-performing loans , clearing arrears, reforming primary health care and labor laws.”

The 2% aid margin relates to the €11.3 billion EFSF loan to Greece (part of the second Greek programme), which was used to finance a debt buyout in 2012. The margin was originally intended to apply to this loan from 2017 onwards. As part of the short-term debt relief measures, the rate hike margin was reduced to zero for the year 2017. As part of the subsequent medium-term debt relief measures for Greece, a conditional mechanism was agreed to reduce the escalation margin to zero, starting from from the year 2018. Such reductions were implemented by decisions of the board in relation to the six-month periods until the end of 2022, based on a positive assessment of the continued implementation of key reforms by Greece under the ESM program and compliance with commitments of politics after the program. On the same basis, the decision was taken to reduce the margin from January 1, 2023 onwards.

Regarding the transfer of SMP/ANFA equivalent income amounts to Greece on a six-monthly basis, it is recalled that this depends on the country’s compliance with its policy commitments. It was one of the medium-term debt relief measures for Greece mentioned in the Eurogroup statement of 22 June 2018.

The reduction in the aid margin and the transfer of SMP/ANFA income equivalent amounts represent the eighth tranche of debt relief measures under policy for Greece.