Undersecretary of National Economy and Finance Thanos Petralias, in response to a timely question to SYRIZA MP Nikos Pappas, analyzed the benefits of prematurely repayment of the Loan Facility (GREEK Loan Facility).

As he said to date, the Greek State, for the bilateral loans of the European GLF European Union countries, has already repaid € 21.3 billion, and has also made full repayment of loans to the IMF.

As announced, the residual amount of these loans amounting to 31.6 billion euros will repaid prematurely by 2031that is, a decade earlier than normal doses expiration in the year 2041.

So for the current year 2025, the Greek state will make, the Decemberto early repayment of the first memorandum loanof € 5.29 billion, with this amount involving the expiors from 2033 to 2041.

And Mr. Petralias notes the following:

What will the country win by early repayment?

Under current market conditions, repayment is expected to bring an immediate reduction in general government debt by approximately 2.2% as a percentage of GDPas well as saving resources through the reduction of annual interest costs by about € 150 million for a 12-year medium period.

In addition, early repayment reduces the risk of interest rate and the risk of debt refinancing and contributes to the further improvement of the Greek economy’s debt to international ratings.

With the early repayment of the loans of the first memorandum following the complete repayment of IMF loans, the risk of increased debt service costs from 2032 onwards is halted.

With this move, the Greek State passes a message of further safeguarding in institutions, evaluation agencies but mainly to the international investment community that it is moving with foresight and insight, timely and safely, in order to further reduce its annual future financial needs.

Why is the premature repayment of GLF loans?

GLF loans are raised on more expensive terms than other official loans in the country. Today the country’s public debt has an annual cost of service of 1.73% and a weighted average of 18.8 years. At the same time, the GLF loan rate is floating and corresponds to Euribor now 0.5%, which in 2024 exceeded 3%.

Mr Pappas’ reference to service rate including SWAP 1.5% does not take into account that this interest rateas the Public Debt Management Organization states, Includes interest rate swap actsthe benefit of which after repayment remains and is transferred to other debt elements. Consequently by repaying the loan, the burden of annual interest that It pays the state equal to the amount of the Euribor interest rate +0.5%.

In addition, Mr Pappas ignores his position that debt repayment is a financial, namely cash transaction and is not a financial transaction. According to Eurostat rules, financial transaction is a transaction that is not counted in either primary surplus or in the total deficit or spending targets. On the contrary, public spending are fiscal transactions that reduce the surplus or increase the overall deficit, count on the expenditure target and also increase the country’s public debt.

Therefore, two concepts of sizes cannot be confused and does not replace each other. Financial expenditure burdens the financial outcome of the state, the costs index and increases the debt, while the loan repayment is a financial transaction that is not counted on the budgetary outcome, nor the cost index and reduces debt.

OR viability and the positive prospects of Greek public debt fully reflected by continuous decline in margins (spreads) of Greek government securities against other eurozone countries. They are also reflected in the ongoing upgrades of the Greek economy’s debt, especially during the last two years that the investment level has been reached.

The benefit of the declining is not theoreticalbut it considers reduced interest payments and improving the country’s credibility, which ensures higher growth, less weights for the future and ultimately more prosperity for citizens.

This is a huge conquest due to the sacrifices of the Greek people and will certainly neither go to lose.