The Boards of Directors of the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF) agreed today to grant Greece a waiver from the mandatory early repayment of ESM/EFSF loans that would have been triggered by its early repayment to the lenders of the Greek Loan Facility (GLF).
The ESM Board of Directors also approved the use of funds from a special cash reserve account, which was created at the end of the adjustment program, to partially finance this early repayment.
Under the ESM and EFSF loan agreements with Greece, early repayment to certain creditors, including GLF lenders, triggers a pro-rata early repayment obligation to the ESM and the EFSF. Thanks to the waivers granted today by the ESM and the EFSF, Greece will no longer be required to make a pro-rata early repayment.
“Greece continues to make steady progress in strengthening its economy. This additional early repayment to GLF lenders—the second largest to date—sends yet another positive signal to financial markets, reduces interest rate risk for Greece, and improves its debt structure.
“The ESM and the EFSF remain committed to supporting the Greek authorities in their efforts to promote long-term growth and debt sustainability,” said Pierre Gramegna, Managing Director of the ESM and CEO of the EFSF.
The waivers and the use of the cash reserve were approved following a formal request from the Greek government, which proposed the early repayment of loans under the GLF that were originally due in 2029 and during the period 2033–2035, totaling €6.94 billion. Upon completion of this transaction, the funds held in the cash reserve account will be exhausted.
The Greek Loan Facility was part of the first financial assistance program for Greece, which was agreed upon in May 2010. It consisted of bilateral loans from 14 euro area countries totaling €52.9 billion, of which €26.3 billion remains outstanding.
Greece completed repayment of its loans to the IMF two years ahead of schedule, in 2022. The most recent early repayment of GLF loans took place in 2025.