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ATHENS, March 4 (Reuters) – The European Stability Mechanism (ESM), the euro area bailout fund, on Thursday announced that it had approved Greece’s request for early repayment of expensive debt from the International Monetary Fund.

Greece applied to the ESM in February asking it to repay an estimated € 3.3 billion ($ 3.97 billion) debt to the IMF this year, out of a total of € 5 billion. euros of outstanding loans due by 2024.

The move allows Athens to reduce its debt servicing costs, as IMF loans bear higher interest than what Greece would now pay in the market.

Greece repaid an additional € 2.7 billion in IMF loans in November 2019, ahead of schedule. According to Greek government officials, the loans he plans to repay now expire in 2021 and 2022.

The country has received three international bailouts from the euro area and the IMF worth 280 billion euros since 2010. It came out of its last bailout in August 2018 and has since relied on the markets debt to cover its borrowing needs.

As part of a bailout, early repayment to the IMF would result in the immediate repayment of a proportional amount of EU loans. The exemption granted by the ESM and the European Financial Stability Fund (EFSF) means that Greece will not be required to make such a payment to either institution. ($ 1 = 0.8304 euros) (Report by Renee Maltezou; edited by Emelia Sithole-Matarise)

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