## Press Release: IMF Executive Board Completes Fifth Review Under Stand-By Arrangement for Greece and Approves €2.2 Billion Disbursement

_IMF News, December 5, 2011_

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## Bibliographic details
- Published: December 5, 2011

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### Fifth review outcome and disbursement
- The Executive Board completed the fifth review of Greece’s economic performance under a program supported by a three-year Stand-By Arrangement (SBA).
- Completion of the review enables the immediate disbursement of an amount equivalent to SDR1.9 billion (about €2.2 billion).
- Total Fund disbursements under the SBA now amount to an amount equivalent to SDR 17.5 billion (about €20.3 billion).

### Performance criteria, waivers, and data revision
- The Executive Board approved:
  - Modification of performance criteria.
  - Waivers of non-observance of performance criteria related to:
    - the primary cash balance for the general government,
    - privatization receipts,
    - external payments arrears.
  - Waivers for the non-observance of the external payments arrears performance criterion following minor data revision after the approval of the arrangement.

### SBA program design and exceptional access
- The SBA was approved on May 9, 2010 (see Press Release No. 10/187).
- The SBA is part of a joint package of financing with Euro area member states amounting to €110 billion over three years.
- The arrangement entails exceptional access to IMF resources, amounting to about 2,400 percent of Greece’s new quota as a result of the 2008 quota reform.

### Managing Director Christine Lagarde — assessment and outlook
- Positive achievements noted:
  - “Greece has substantial achievements to its credit, including a large fiscal deficit reduction.”
- Key risks and current difficulties:
  - “The program is in a difficult phase, with structural reforms proceeding slowly, the economy weak, and the external environment deteriorating.”
  - These factors “have warranted a substantial downward revision to the medium-term outlook.”
- Political context:
  - “The creation of a national unity government and the endorsement of program objectives and policies by major parties is an important step.”
  - The new government should “use its wider mandate to steadfastly implement the program.”

### Policy priorities and recommended actions
- Fiscal policy
  - “Fiscal adjustment remains the most immediate challenge for the authorities.”
  - Recent enactment of new measures will help correct implementation slippages.
  - Adjustment efforts must be supported by prompt implementation of underlying fiscal reforms to:
    - downsize the public sector,
    - strengthen tax collection.
- Financial sector stability
  - “Preserving financial sector stability is another key challenge.”
  - Plans to recapitalize banks are in place alongside a revised resolution framework to:
    - avoid disruptions to depositors,
    - contain public sector costs.
  - “Viable banks should continue to have access to liquidity support.”
- Privatization
  - “The government’s privatization plan can deliver higher investment, growth, and debt reduction.”
  - Preparations must move forward expeditiously to give the Privatization Agency scope to meet the overall program target in a reasonable timeframe.
- Structural reforms and competitiveness
  - “Structural reforms must accelerate to help improve competitiveness via productivity growth.”
  - Plans are in place to reduce high labor taxes.
  - Authorities must finalize:
    - the liberalization of closed professions,
    - implementation of business environment reforms.
- Debt sustainability and external support
  - “Private sector involvement and prolonged support at low interest rates from European partners are crucial to reduce debt to a sustainable level.”
  - “Near-universal participation in the proposed private debt exchange will be important to realize a sustainable debt position, meet financing needs, and ensure continued Fund support.”

*Press Release No. 11/440 — December 5, 2011*

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## References

- [Greece and the IMF](http://www.imf.org/external/country/GRC/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Press Release No. 10/187](https://www.imf.org/external/np/sec/pr/2010/pr10187.htm)
- [2008 quota reform](https://www.imf.org/external/np/sec/pr/2011/pr1164.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr11440_