IMF board approves record 30b euro loan for Greece
Tuesday, 11 May 2010
WASHINGTON, May 10 (AFP): The International Monetary Fund's executive board approved a record 30-billion-euro loan yesterday for Greece, whose debt woes have shaken global financial markets.
"The IMF executive board has concluded its discussion on Greece and approved a three-year stand-by arrangement for a total amount of SDR (Special Drawing Rights) 26.4 billion (30 billion euros)," the fund said in a statement.
The action came at the end of a week that saw the euro plunge and financial markets reel amid uncertainty over whether Greece could implement deeply unpopular austerity measures and stave off bankruptcy.
The IMF loan is part of a larger 110-billion-euro package offered in conjunction with 15 eurozone nations in exchange for austerity measures that sparked violent street protests in Athens.
The loan "is the biggest ever in relation to the country's quota in the IMF (32 times, or 3,200 per cent of quota), and also the biggest non-precautionary loan ever approved by the IMF," a fund spokesman told AFP.
He said two previous loans to Mexico and Brazil were bigger "but they were both precautionary (the country has the option to draw upon it) and were not drawn."
Greece hopes funds from the bailout loan will start flowing before its next maturing debt payment on May 19 so as to avoid a default.
The IMF said that, under the agreement, 20 billion euros would be immediately available to Greece from the IMF and the EU.
Total financing for Greece this year from the fund and EU would come to about 30 billion euros.
It is hoped the IMF-EU loan package will save Greece from bankruptcy as it deals with its colossal, 300-billion-euro public debt that has precluded its borrowing from financial markets.
Athens in turn has vowed 30 billion dollars in budget cuts through a series of tough and unprecedented austerity measures, to push the public debt below the three per cent of gross domestic product limit set by the Eurozone Stability Pact, by 2014.
"The IMF executive board has concluded its discussion on Greece and approved a three-year stand-by arrangement for a total amount of SDR (Special Drawing Rights) 26.4 billion (30 billion euros)," the fund said in a statement.
The action came at the end of a week that saw the euro plunge and financial markets reel amid uncertainty over whether Greece could implement deeply unpopular austerity measures and stave off bankruptcy.
The IMF loan is part of a larger 110-billion-euro package offered in conjunction with 15 eurozone nations in exchange for austerity measures that sparked violent street protests in Athens.
The loan "is the biggest ever in relation to the country's quota in the IMF (32 times, or 3,200 per cent of quota), and also the biggest non-precautionary loan ever approved by the IMF," a fund spokesman told AFP.
He said two previous loans to Mexico and Brazil were bigger "but they were both precautionary (the country has the option to draw upon it) and were not drawn."
Greece hopes funds from the bailout loan will start flowing before its next maturing debt payment on May 19 so as to avoid a default.
The IMF said that, under the agreement, 20 billion euros would be immediately available to Greece from the IMF and the EU.
Total financing for Greece this year from the fund and EU would come to about 30 billion euros.
It is hoped the IMF-EU loan package will save Greece from bankruptcy as it deals with its colossal, 300-billion-euro public debt that has precluded its borrowing from financial markets.
Athens in turn has vowed 30 billion dollars in budget cuts through a series of tough and unprecedented austerity measures, to push the public debt below the three per cent of gross domestic product limit set by the Eurozone Stability Pact, by 2014.