ESM Plan

A Little Debt Relief for Athens

  • Why it matters

    Why it matters

    A dispute is brewing over a plan by the European Stability Mechanism to safeguard Greece against the risk of rising interest rates. The plan would increase Greece’s costs until 2022 but lower them in the long term.

  • Facts

    Facts

    • The ESM, which replaced the EFSF as the bloc’s bailout fund in 2012, began to disburse Greece’s third bailout last year.
    • The ESM plan consists of three measures: lengthening the term of the EFSF loans, waiving a fee and protecting Athens from rising interest rates.
    • The plan could reduce Greece’s debt relative to GDP by 21.8 percent by 2060.
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People sit in a cafe of a hotel’s roof garden with the Acropolis hill in the background in central Athens
Could Athens be seeing some debt relief? Source: Reuters

Euro zone countries are preparing some minor debt relief for Greece.

The E.U. bailout fund, the European Stability Mechanism, would be used to safeguard the country against the risk of rising interest rates. The details are laid out in an ESM document that Handelsblatt has obtained.

The ESM replaced the European Financial Stability Facility or EFSF as the bloc’s bailout fund in 2012. In the summer of 2015 Greece’s troika of creditors – the European Union, the European Central Bank and the International  Monetary Fund – agreed to a third bailout for the struggling country since 2010 worth €86 billion, which was tied to a series of economic reforms.

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