The fourth successive reduction of Greece’s debt was approved today by the European Financial Stability Facility (EFSF). It will remove €122.5 million from the country’s debt obligation.

The EFSF Board of Directors gave the “green light” to reduce to zero the step-up margin accrued by Greece for the period between 17 June 2020 and 31 December 2020.

The decision is part of the medium-term debt relief measures agreed in 2018.

Greece has continued its reform process under difficult circumstances” Klaus Regling, ESM Managing Director and EFSF CEO said. “The government has taken important steps to improve the business environment and increase the effectiveness of the public administration. In addition, a major reform of the insolvency framework is being implemented. Therefore, the European institutions delivered a positive assessment regarding the completion of Greece’s reform commitments in the first half of 2020. This cleared the way for the next tranche of debt relief measures tied to those commitments”.

About a month ago, the European Stability Mechanism (ESM) made a transfer to Greece amounting to €644.42 million, equivalent to the income earned on SMP/ANFA holdings.

Much needed relief

After a period of debt reduction, forced by the three Economic Adjustment Programs implemented in the country, public debt of Greece is on the rise again. It exceeds €350 billion.

It is one step from hitting the 200% of GDP ratio.

Euro area and EU quarterly net lending, seasonally adjusted data 2020Q3

According to the latest eurostat data, the highest ratio of government debt to GDP at the end of the third quarter of 2020 was recorded in Greece (199.9%).

Nevertheless, Greece enjoys negative yields on its government bonds and has been upgraded by the Credit Rating Agencies.