The Eurogroup of 5 December 2016 discussed the sustainability of Greek public debt with the objective to regain market access. In this context, the Eurogroup endorsed today the full set of short-term measures on the basis of proposals by the ESM and preparatory work by the EWG, which will be implemented by the ESM following this meeting. Those measures will consist of:
- The smoothening of the EFSF repayment profile within the current weighted average maturity of up to 32,5 years;
- The waiver of the step-up interest rate margin amounting to 200 bps related to the debt buy-back tranche of the 2nd Greek programme for the year 2017;
- The use of the EFSF/ESM funding strategy as markets allow to reduce interest rate risk without incurring any additional costs for former programme countries. This measure will be implemented through: (i) exchanging the EFSF/ESM back-to back notes supporting the bank recapitalization loans to Greece, (ii) the ESM entering into interest rate swaps to mitigate the risk of higher market rates and (iii) introducing matched funding for future disbursements to Greece under the current programme.
During the Eurogroup meeting, the IMF staff reconfirmed its intention to recommend to the Fund's Executive Board a new financing arrangement for Greece as soon as possible once staff-level agreement is reached in accordance with established Fund policies.