Following that, Mr.Regling stressed that these funds are not used in order to issue actual loans but as collaterals in order for the ESM to borrow money from the markets under very favourable terms. In that manner, according to Regling, the ESM is very different from the IMF which is being funded from the central banks. “We transfer the low cost of our financing to those countries which are in a program, thus securing great savings for them”.
As an example, Mr.Regling explained that Greece had 8bn worth of savings in 2014 alone in the cost of repaying its debt. He also noted that this amount is 4.4% of the GNP and will be repeated every year. “If the reforms continue, Greece will be able to regain the viability of its public debt”.
The ESM and the EFSF has used 254.4 bn euros for the rescue programs towards those five countries while its borrowing capacity is 700bn. euros. Mr.Reglings claimed that these two funding organizations are particularly crucial in order for the Eurozone to keep its unity.
Mr. Regling also noted that three of the five countries have already finished with their programs while Cyprus will have completed its program by March. He noted that Greece could be a success story if it manages to imply the agreed package of reforms in full.
C.N.