December 18, 2019 / 11:42 AM / a month ago

EXCLUSIVE-Greece mulls more IMF repayments next year, targets lower surplus

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By Lefteris Papadimas

ATHENS, Dec 18 (Reuters) - Greece is considering repaying more IMF loans ahead of time next year to offload expensive debt and wants to convince its official lenders to lower its post-bailout fiscal targets, Finance Minister Christos Staikouras said on Wednesday.

Greece emerged from international bailouts in 2018 but its fiscal progress is still being monitored by the euro zone and the International Monetary Fund, which together lent Athens more than 250 billion euros during its decade-long debt crisis.

Last month, the country repaid 2.7 billion euros of IMF loans, reducing the amount it owes to the Washington-based Fund to 5.5 billion euros ($6.06 billion). These loans have an average interest rate of 1.9% and expire gradually up to 2024.

Staikouras did not disclose the amount Athens would look to repay in 2020 but told Reuters it would be small enough to keep the Fund in the post-bailout monitoring process.

“It is possible for a new early repayment of an additional part of IMF loans in 2020,” he said, with parliament set to vote on a 2020 budget which projects economic growth of 2.8%.

“The new early repayment should be up to a certain amount that would allow the IMF to keep its presence in Greece until the end of the post-programme surveillance period.”

Greek 10-year bonds currently trade at yields of around 1.36% — a fraction of their levels during the debt crisis when the 10-year yield topped 40%. Greece’s debt to GDP ratio is the highest in the euro zone.

Repaying IMF loans is part of Greece’s rebound strategy, Staikouras said, adding that Athens wants to improve its debt sustainability. The conservative government, which came to power in July, believes that lower borrowing costs, investments, tax cuts and reforms will help boost growth.

“We intend to take all necessary steps to revitalise every aspect of the economy,” he said.

Before its third bailout expired, Greece agreed to achieve a primary budget surplus — excluding debt servicing costs — of 3.5% of GDP annually up to 2022 and 2.2% thereafter. Its finances have improved in recent years and Athens now hopes the target can be lowered.

Staikouras said the issue would be discussed with official lenders next year, while “conditions are maturing”.

“It is feasible as long as we move in a coherent and prudent way,” the 46-year old finance minister said. “We first need to convince them (lenders) that the targets must be lowered.”

With a cash buffer of about 30 billion euros, Greece does not need extra funds to cover its financial needs next year.

But Staikouras said it must preserve a presence in capital markets. “You need to interact with markets,” he said.

$1 = 0.9073 euros Reporting by Lefteris Papadimas; Editing by Renee Maltezou and Catherine Evans

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