–Adds Comments On Reforms Program, Challenges in 2014 and 2015

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 a Greece rescue
facility in 2013 — will be changed to a 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.”

Speaking later in the day at an event hosted by the
Hellenic-American Chamber of Commerce, Papaconstantinou said the
extension on repayments was “an important moment for a number of reasons
and gives a signal of viability to the international markets…The
fiscal consolidation and growth is important but you have a problem
after 2013. You have two years 2014 and 2015 with increased borrowing
demands,” he noted.

Even over the short term, Greece faces “very crucial months ahead”
in the execution of its budget consolidation and economic reform plans,
the minister said. The government must make “crucial decisions such as
on privatizations, changes in the labor market, and liberalization of
the energy market,” he said.

He added: “This is how it is going to be every three months. We
shouldn’t say that we are doing the changes because we want to receive
the next loan installment. We should say we are doing it for ourselves
and our children.”

–Angelika Papamiltiadou, a_papamiltiadou@hotmail.com

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