International Monetary Fund Agrees To Give Greece $4.2 Billion

(AP) WASHINGTON -- The International Monetary Fund approved on Friday just over $4.2 billion for Greece, the latest installment of a rescue package aimed at helping the country pull back from an impending debt default.

The move by the executive board had been expected after a decision last week by eurozone finance ministers to give Greece their portion of a $17.4 billion loan payment that is part of a $259 billion package agreed to last year.

Friday's IMF action, with new Managing Director Christine Lagarde in the chair, came as European banks, insurance companies and other financial institutions were trying to get the private sector involved in helping save Greece from default.

The 17 countries that use the euro will continue, with the IMF, to prop up Greece's struggling economy in the coming years with a second package of aid loans to be completed in September.

Lagarde said the raft of reforms, spending cuts and tax hikes the government has been carrying out as part of conditions to receive bailout funds "is delivering important results: the deficit is being reduced, the economy is rebalancing and competitiveness is gradually improving."

However, she said, Greek officials still face significant challenges, including meeting a target of getting its burdensome debt down to 7.5 percent of gross domestic product in 2011 and to less than 3 percent by 2014.

Lagarde said, "Greece's debt sustainability hinges critically on timely and vigorous implementation of the adjustment program with no margin for slippage, and continued support from European partners and private sector involvement."

She said the government's privatization strategy is a critical step toward boosting investment and reducing the debt burden.

The European Union and the IMF Fund had said they would refuse to pay out the next installment unless Greek lawmakers approved a new five-year package of $40 billion worth of spending cuts and tax increases and a $72 billion privatization plan before the end of June. Greek lawmakers delivered what was asked of them, cheering up global financial markets but provoking violent demonstrations in the streets of Athens.

Lagarde, a former French finance minister, took over as head of the 187-member lending institution on Tuesday, replacing Dominique Strauss-Kahn, who resigned in May to fight charges he sexually assaulted a New York City hotel housekeeper. Lagarde is the first woman to head the organization since it was founded after World War II.

Comments

[Renlim]

06:03 AM on 07/11/2011

I guess the EU & the US are done with setting up counties on loans for the sake of privatization like Africa, South America and South East Asia and now feeding & privatization of their own. Create a default and a few may own the whole infrastructure. You own and control the populous..and you can say by-by too the innovations of entrepreneurship and opportunity.

[offmyrocker]

07:30 PM on 07/10/2011

you mean the IMF has come up with the amount the USA will give Greece...We are the IMF

[Michael GE]

08:03 PM on 07/10/2011

?
You (the US) are exactly 15.82 percent of IMF payments and some 16.x percent of votes. ... You are not the IMF, which is why a European runs it.

[offmyrocker]

08:07 PM on 07/10/2011

OK sure....

[LMPE]

01:43 PM on 07/10/2011

There go Greece's neighborhoods.

[westcoastsc]

11:49 AM on 07/10/2011

Isn't this something like the Godfather?

We've got an offer you can't refuse. Accept this money and the our terms of repayment.

[jo smith456]

10:02 AM on 07/10/2011

After Greece stopped the "Gaza Flotilla" from leaving Greek ports...

[themodernleader]

06:24 AM on 07/10/2011

The IMF is furnishing a thicker rope for the Greeks to hang themselves. First, the IMF is absolutely derelict in lending any more money to Greece. Second, Greek leadership is derelict in accepting any more loans that they can never repay. The solution is rational default or forgiving of the previous loans and nation building loans, possibly. the money changers must take a hit, not the generality of innocent people..

[Michael GE]

10:21 AM on 07/10/2011

While your views in the last sentence sound laudable, I think that most of that is theory/ academical but not realpolitics. I think so because of the actual facts, all "-isms" aside (social-,capital-, popul-), all the history aside (spilled milk) and away with lofty principles.

IMO, the situation is this:
- Greece does have an unsustainable amount of debt.
- Despite all austerity, there is still a gap of 10% between Greece's (tax) revenues and spending. This gap wont go away just by defaulting.
- Many ppl seem to forget that the European Monetary Union is not only the Eurozone but also an exchange rate mechanism towards those EU nations with still sovereign currencies.
- Most of Greek debt is held nowadays either by the ECB directly, by nationalized or state run banks in Europe, but ofc by the Greek banks (here we have an indirect effect on the ECB). So, this way or that, much of the Greek debt is in the hands of taxpayers in Europe anyways. Not taking into account effects like pension funds etc. where also "Joe Average" will take a fiscal hit.

Because of these costs alone, which other European nations/ taxpayers would have to face immediately in their respective national budgets (let's leave aside the domino- effects), you cannot ask them to A) accept the losses and B) keep funding the revenue gap in Greece.
Greece on the other hand, when defaulting, is probably failing the Lisbon/Maastricht/EMU Treaty/ies- consequences?

[themodernleader]

03:26 PM on 07/10/2011

No doubt you are right. But I read from reliable financial circles that American banks own a large hunk of the Greek debt. That is another indicator of the precarious position of the American banking system. American capitalism is dangerously dysfunctional in theory and practice.

[Michael GE]

11:01 AM on 07/10/2011

post scriptum:
I should mention that I do think the financial sector needs to contribute much more and sooner rather than later (some good ideas, loh and behold, are already set in motion by the EU parliament).
I do think though that it's pointless to try and get a contribution by playing along their rules on the bond market. If the measure to save costs us an amount X, we pay it now and implement a financial transaction tax in a way that after, let's say, five years we milk the money plus interest out of the financial sector. The more we have to bail out, the higher we will just set the tax (or invent even others).

[nkurland]

10:47 PM on 07/09/2011

Funny, I could've sworn the IMF gave Greece the shaft.

[300millionblindmice]

09:18 AM on 07/10/2011

A shaft with a 6bn profit margin according to the guardianUK. Funny how their loans always seem to get priority clause.

[MajorKong]

10:19 PM on 07/09/2011

Dibs on the Acropolis! I want to put a Taco Bell there.

[riverhouse]

09:08 PM on 07/09/2011

I vote for a slap.

[300millionblindmice]

08:18 PM on 07/09/2011

I just love the way the "private sector" is refusing to assume some of its losses and expects the public sector to foot the entire bailout package. I have a novel idea. Since the private sector made the loans, let them eat their cake.

Just curious, I don't here nothing about the stockholders rage. Oh wait. Most of the stockholders are really pensioners who haven't a clue of how bad a shape their funds are in.

IF we're going to bailout someone, it should be the pensioners AFTER the managers, who have been raking in huge, mostly secretive, fees are convicted of fraud and are cellmates of the bankers who started the feeding frenzy.

[Michael GE]

02:39 PM on 07/10/2011

Hmm, from all figures and statistic and pundit comments etc. I have seen so far: Most of the bonds are held by European institutions (ECB, national banks, state- owned banks, etc.) and ofc the Greek central bank and the Greek banks in general.

Soooo, after an unilateral default the EU/ Eurozone nations will need to transfer additional taxpayer money to the ECB and to the nationalized or state owned banks. But while unpleasant, it wouldn't really affect most European nations.
But Greece: They would still have a 10 percent gap between national revenues and spending. The Greek banks would immediately vanish because they will no longer be able to lend money from the ECB but still hold lots of these bad bonds. Similar the Greek central bank. And all bailout deals or any other help by the Eurozone or EU institutions will surely be cancelled immediately because Greece couldn't ask the other nation's taxpayers to A) pay/ write off all old Greek loans and B) keep funding Greece (= more loans).

[300millionblindmice]

07:59 PM on 07/09/2011

Another US taxpayer bailout. The US funds almost 30% of the IMF budget.

[Michael GE]

09:07 AM on 07/10/2011

15,82%. But part of that is owed to the fact that the US wants to have some sort of veto (for all those decisions that requiere 85% votes in approval).

[300millionblindmice]

09:14 AM on 07/10/2011

thanks for the correction.

[Genders]

07:41 PM on 07/09/2011

The Bankster, GS in particular, crashed the economy, extorted trillion in free .004% FED money, so they can do the ultimate leveraged buyout of the world, with Greece as an appetizer.

The GOP won't save us. The Obama Clinton DINO's won't either, they are arguing on if the spending cuts should be 100% or only 85%, both of which will lead to the greatest depression in world history.

http://cpc.grijalva.house.gov/
Read their budget! It's the only one that solves the problems.

"Whoever controls the volume of money in any country is absolute master of all industry and
commerce." — James A. Garfield, President of the United States

"A great industrial nation is controlled by it's system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world--no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men." — President Woodrow Wilson

[mrdailydigger]

06:13 PM on 07/09/2011

Does anyone truly believe this is the end of the Greek debt problem? Seriously! Everyone knows its only a matter of time before they default. Their debt is at silly levels and nobody has any confidence that they will or can pay it back. The entire situation is like some dodgy pyramid scheme!

[jcaunter]

05:58 PM on 07/09/2011

This headline is surreal. The IMF doesn't "give" anyone anything..

[Marcospinelli]

05:01 PM on 07/09/2011

Greece is being forced to sell its antiquities and choice real estate.