ESM clears way for Greece's second early repayment of IMF loans

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FILE PHOTO: The IMF logo is seen outside the headquarters building in Washington

ATHENS (Reuters) - The European Stability Mechanism (ESM), the euro zone's bailout fund, said on Thursday it approved Greece's request for an early repayment of expensive International Monetary Fund debt.

Greece filed a request to the ESM in February asking to repay debt worth about 3.3 billion euros ($3.97 billion) to the IMF this year, out of a total of 5 billion euros in outstanding loans due by 2024.

The move allows Athens to reduce its debt-servicing costs, because IMF loans carry higher interest than Greece would now pay on the market.

Greece repaid another 2.7 billion euros of IMF loans in November 2019, earlier than expected. According to Greek government officials, the loans it plans to repay now expire in 2021 and 2022.

The country has received three international bailouts from the eurozone and the IMF worth 280 billion euros since 2010. It emerged from its latest bailout in August 2018 and has relied on the debt markets to cover its borrowing needs since.

Under bailout terms, an early repayment to the IMF would result in a proportional amount of EU loans becoming immediately payable. The waiver granted by the ESM and the European Financial Stability Facility (EFSF) means that Greece will not be required to make any such payment to either institution.

($1 = 0.8304 euros)

(Reporting by Renee Maltezou; editing by Emelia Sithole-Matarise)