They have agreed to an adjustment of the maturities of the EFSF loans to both countries in order to smooth the debt redemption profiles of those countries. The technical details will be put forward to the Eurogroup by the Troika and the EFSF at the same time as the MoU underlying the Cypriot adjustment programme.
As regards the EFSM, any extension of the maturities of the loans is for consideration and decision by ECOFIN Ministers.
Press release
Nuno Melo (PPE) asked the following questions on 8 February 2013:
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Is it possible to lengthen the maturity of loans from the Troika to the bailed-out countries?
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Does the Commission believe that lengthening the maturity of loans would foster economic growth in these countries?
VP Rehn replied on 22 March 2013:
The possibility to lengthen the maturity of loans granted by the EU and the euro area Member States to Portugal and Ireland — via EFSM and EFSF — is currently under consideration. A number of legal, technical and financial issues have to examined in this context. The eventual decision whether and, if yes, in which format to lengthen the maturities of loans is in the hands of the Council and of the euro area Member States. The extension of IMF loans is not considered.
The extension of EU loan maturities in an appropriate format could help Portugal and Ireland to ease market access. It could also have an indirect effect on economic growth. The low-cost loans would be outstanding for longer, so Portugal's implicit interest rate and respectively interest expenditure during the years of extension would be lower (assuming that private investors would continue charging higher interest rate). The State could use savings in interest expenditure for investment or public consumption, possibly generating growth. Economic adjustment programmes for Ireland and Portugal include several specific measures, in particular in the structural field, that explicitly target the reinvigoration of economic growth in these countries.
© European Council
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