ATHENS (MNI) – A decision by Eurozone finance ministers to extend
maturities on Greek repayments of EMU-IMF loans in line with the Irish
aid deal agreed on Sunday means Greece would now have until 2024 to
repay those loans, the country’s Finance Minister George
Papaconstantinou said Monday.

Papaconstantinou, in a press briefing, specified that the current
loan terms, which call for a repayment period of two years plus a grace
period of three years — starting from the end of Greece rescue facility
in 2013 — will be changed to repayment period of seven years and a
grace period of four, which totals eleven years beyond 2013.

He said the change, subject to approval by the European Parliament,
could take place in January or February.

“The Eurogroup’s decision yesterday, according to which the Council
will rapidly examine the necessity to harmonize Greece’s repayment
timeframe with that of Ireland, is a very important addition and paves
the way for the extension of Greek debt — and therefore paves the way
for the markets to be open sooner for Greece,” Papaconstantinou said.

He acknowledged that the extension on repayment would come with a
higher interest rate. Right now, he said, Greece is borrowing from the
EMU and IMF at a fluctuating rate that averages around 4% and a fixed
rate of 5.5%. The new terms would raise the fixed rate to 5.8%, similar
to the Irish deal, he said.

However, there are still a number of issues to be ironed out,
including the size of payments and whether the extension on maturities
concerns all loans made under the program, or only the remaining
tranches not yet transferred to Greece.

Papaconstantinou said that although the formal agreement ends in
2013, Greece will still be obliged to reduce the deficit to under the
EU’s limit of 3%-of-GDP if it has not done so by then.

“It is clear that after the lending agreement expires, the country
with the biggest public debt in the EU (ie, Greece) will have no luxury
to say it’s over,” the finance minister said, putting the nation on
notice that tough times will be around for awhile. “If we want to
control the fiscal time bomb for the next generation, we will have to
achieve primary surpluses,” he said.

However, Papaconstantinou added that by 2013 “the situation will be
clearly better and will allow for distribution of social dividends.”

–Angelika Papamiltiadou, a_papamiltiadou@hotmail.com

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