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  • Eurogroup Working Group to discuss ESM Greek debt reprofiling plan

    If the medium-term debt relief measures are finalised, it is hoped that it should lead to an upgrade of the Greek economy’ credit rating, concomitant lower interest rates, and an improved economic climate, all of which should have a positive impact on the stock market.

    ΤοΒΗΜΑ Team

    The Eurogroup Working Group is scheduled to discuss the European Stability Mechanism’s (ESM) initial proposals for the reprofiling of the Greek debt at its meeting tomorrow.

    The technical discussions will continue over the coming days with ESM technocrats, so that a final plan may be approved at the 12 March Eurogroup.

    The draft plan will also be on the table during talks tomorrow between Pierre Moscovici, who holds the European Commission’s finance portfolio, and Declan Costello, the Commission’s representative among the group of creditors, on the one side, and Prime Minister Alexis Tsipras and Finance Minister Euclid Tsakalotos on the other.

    It should be noted that short-term measures to manage the public debt, that were put in place on 1 January, 2017, are expected to lead to a 25 billion reduction in the debt.

    If the medium-term debt relief measures are finalised, it is hoped that it should lead to an upgrade of the Greek economy’ credit rating, concomitant lower interest rates, and an improved economic climate, all of which should have a positive impact on the stock market.

    Measures under consideration

    The medium term debt relief package is expected to include, inter alia:

    Linking debt repayment to the course of Greek GDP

    A premature buyout of Greece’s 11 billion euro debt to the IMF by the ESM, reducing the interest rate from 3.8 percent to 0.8-0.9 percent

    The return of ECB profits from ANFA (Agreement on Net Financial Assets) and SMP (Securities Market Programme), from the ECB purchase of Greek debt, and the reprofiling of EFSF loans as follows.

    Extension by 15 years of the repayment period

    A 0.4 percent of GDP ceiling on annual EFSF annual loan repayments

    A partial suspension of interest payments on EFSF loan up to the year 2050. Greece will pay a one percent maximum interest rate, and the remainder will be postponed

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