Tsakalotos: Greece planning early repayment of ‘expensive’ IMF loans

Greece’s Finance Minister Euclid Tsakalotos on Tuesday confirmed that Greece is planning to repay loans from the International Monetary Fund (IMF) early, while speaking to the Greek local radio station “Radio Thessaloniki 94.5”.

Asked whether Greek authorities are considering early repayment, Tsakalotos replied “of course” and noted that the IMF loans are “very expensive debt”. He pointed out that approximately 3.5-4.0 billion euros of the IMF debt carries an interest rate of 5.0 pct, at a time when Greece is able to borrow at much lower rates. The savings that will be generated, according to the minister, can then be used to lower taxes and implement social policies.

Tsakalotos reassured listeners that the government will soon present a regulation on the settlement of private arrears to the tax authorities, offering repayment of debt in up to 120 monthly installments. He noted that the government was planning a “smart system” to help those in real need. “We have to protect those who are in real need and those who are conscientious in servicing their debts,” the Greek finance minister said, adding that the measure of 120 installments was “not within the sphere of the talks” with the institutions. “The institutions’ concern is that we do not destroy a payment culture,” he added.

Tsakalotos said that an electronic platform on non-performing mortgage loans will operate very soon and stressed that this platform will help both banks to reduce their NPLs and new couples to take out mortgage loans.

Commenting on whether the Greek government will begin a battle to avoid any reduction of the tax-free income allowance on December 31, 2019, Tsakalotos said this was not the right time to comment. “My position is the same as it was last year when you asked me if pensions will be cut. Then, I was saying that everything has its time and finally pensions were not cut. It is not the right time. The government is negotiating, with good timing I think, especially in the last two years, and obviously listens to society when this says that a reduction of the tax-free allowance would be very problematic.”

The finance minister acknowledged that the government’s priority was to support lower incomes initially, when unemployment stood at 27-28 pct of the workforce, economic growth was slow and state coffers were empty. “But now things are changing,” he added and noted that the government has secured 3.5 billion euros in the next three years, of which half will cover tax reductions.

Tsakalotos said the decision on holding national general elections in the country “lies with the prime minister,” although he added that his own position was “the later, the better”.