{
  "title": "Press Release: IMF Executive Board Approves €28 Billion Arrangement Under Extended Fund Facility for Greece",
  "publication": "IMF News, March 15, 2012",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr1285",
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  "summary": "Approved a four-year SDR 23.8 billion (about €28 billion, or US$36.7 billion) arrangement under the Extended Fund Facility (EFF) for Greece.",
  "publishDate": "2012-03-15",
  "sections": [
    {
      "heading": "Executive Board decision and financing",
      "content": "- Approved a four-year SDR 23.8 billion (about €28 billion, or US$36.7 billion) arrangement under the Extended Fund Facility (EFF) for Greece.\n- Allows immediate disbursement of SDR 1.4 billion (about €1.65 billion, or US$2.2 billion).\n- The EFF arrangement entails exceptional access to IMF resources, amounting to 2,159 percent of Greece’s quota.\n- Took note of Greece’s cancellation of the three-year Stand-By Arrangement (SBA) approved in May 2010 (Press Release No. 10/187).\n- Official sector support for the second Greek program:\n  - €130 billion (about US$170 billion) in new financing, plus the remainder of the financing support for the first program of €34 billion (about US$44 billion).\n  - IMF contribution of €28 billion will be disbursed in equal tranches over a four-year period.\n  - IMF contribution represents about three-elevenths of the total, excluding payments related to the private sector involvement (PSI) and repayments of bonds held by the European Central Bank.\n  - This structure will keep the Fund’s peak-exposure broadly unchanged relative to the SBA."
    },
    {
      "heading": "IMF Managing Director statement — program rationale and priorities",
      "content": "- Greece has implemented wide-ranging painful measures during a deep recession; fiscal deficit reduced markedly and competitiveness has gradually improved.\n- Key remaining challenges: a large competitiveness gap, a high level of public debt, and an undercapitalized banking system.\n- Program focus:\n  - Restoring competitiveness and growth.\n  - Achieving fiscal sustainability.\n  - Ensuring financial stability.\n- Preconditions and assurances for program success:\n  - Successful debt exchange operation, debt relief and long-term support from European partners.\n  - Commitment of major Greek political parties to program objectives and policies.\n- Policy priorities highlighted:\n  - Competitiveness-enhancing structural reforms, with bold labor market measures, liberalization of professions and product markets, improved business environment, and privatization of state-owned assets.\n  - Significant further fiscal adjustment to put debt on a sustainable downward trajectory.\n  - Reaching a primary surplus of 4½ percent of GDP by 2014 will require politically difficult cuts in government spending and measures to address tax evasion.\n  - Adjustment should be fair and sustainable, including strengthening the core social safety net and tax collection efforts.\n  - Securing financial sector stability and depositor confidence through liquidity support for banks, funds for recapitalization, incentives to preserve private ownership, and strengthened resolution framework and governance of oversight agencies.\n- Risks:\n  - Risks to the program remain exceptionally high; no room for slippages.\n  - Full and timely implementation, broad-based public support, and support from European partners are critical.\n  - Euro area leaders committed to provide adequate support provided Greece fully complies with program requirements and objectives."
    },
    {
      "heading": "Annex — Recent economic developments",
      "content": "- Since 2009 Greece has been unwinding fiscal and external imbalances through deep recession.\n- Real GDP declined by more than 13 percent since 2009.\n- Private investment led the downturn in 2009; public retrenchment started in 2010. By 2011, private consumption became the main driver of the recession.\n- Competitiveness gains not yet evident economy-wide; current account deficit remained close to 10 percent of GDP.\n- Productivity growth turned positive only at the end of 2011 as labor market adjustment gathered speed, but unemployment rose rapidly.\n- Slow adjustment despite deep recession reflects wage and price rigidities and a small tradables sector.\n- Fiscal deficit improved by about 6 ½ percentage points of GDP between 2009 and 2011 despite steep recession.\n- Primary deficit in 2011 was 2 ½ percent of GDP, below the long-run debt-stabilizing level of a 1 ½ percent of GDP primary surplus.\n- Recession and government debt exposure losses left banks undercapitalized, necessitating higher public support."
    },
    {
      "heading": "Program summary (objectives and main measures)",
      "content": "- Program aims: restore competitiveness and growth, attain fiscal sustainability, and secure financial stability.\n- Emphasis on structural reforms to accelerate economic growth and employment.\n\n- Strengthening competitiveness:\n  - Make the labor market more dynamic to improve competitiveness, strengthen growth and reduce unemployment.\n  - Reduce rigidities in product and service markets to increase competition and decrease prices.\n  - Ambitious privatization and steep reductions in bureaucratic barriers to investment to restore investment and growth.\n\n- Improving the fiscal position:\n  - Program provides room for structural reform impacts in 2012, targeting a primary deficit of 1 percent of GDP in 2012.\n  - Bulk of fiscal adjustment to take place in 2013-14 to bring primary balance to the new target of 4½ percent of GDP.\n  - Government will focus on improving tax collection; even with ambitious tax efforts some 5½ percent of GDP in additional spending cuts will be needed.\n  - Cuts will focus on reducing the size of government and more efficiently targeting social transfers.\n  - The core safety net will be strengthened to protect the most vulnerable.\n\n- Restoring financial sector stability:\n  - Significant resources will be channeled to help banks cope with the recession and restructuring of government debt.\n  - Government support structured to provide incentives to maintain private ownership where feasible.\n  - Strengthened framework for bank resolution and recapitalization and for financial sector oversight to ensure effective stewardship and oversight.\n\n- Reducing debt levels:\n  - A combination of private and official sector involvement is expected to deliver enough debt relief to place debt on a trajectory to fall below 120 percent of GDP by 2020 under the program baseline."
    },
    {
      "heading": "Growth expectations and outlook",
      "content": "- Growth in 2012 is expected to be in the range of -4½ to -5 percent, given fiscal adjustment and labor market reforms.\n- Recovery expected to begin quarter-over-quarter in 2013, with moderate cyclical developments in 2014-2016."
    },
    {
      "heading": "Greece: Selected economic indicators (highlights)",
      "content": "- Arrangement and IMF metrics:\n  - SDR 23.8 billion (about €28 billion, or US$36.7 billion) EFF arrangement.\n  - Immediate disbursement: SDR 1.4 billion (about €1.65 billion, or US$2.2 billion).\n  - Exceptional access: 2,159 percent of quota.\n  - IMF quota: SDR 1.1 billion (about €1.3 billion, or US$1.7 billion).\n\n- Key program targets and fiscal figures:\n  - Target primary deficit for 2012: 1 percent of GDP.\n  - Target primary surplus by 2014: 4½ percent of GDP.\n  - Additional spending cuts needed: some 5½ percent of GDP.\n\n- Selected macro series (percentage changes or levels as shown):\n  - Real GDP: 2010 -3.5; 2011 -6.9; 2012 -4.8; 2013 0.0; 2014 2.5; 2015 3.1; 2016 3.0; 2020 2.2.\n  - Output gap (percent of pot. output): 2010 2.9; 2011 -2.4; 2012 -6.7; 2013 -4.7; 2014 -2.6; 2015 -0.9.\n  - Total domestic demand: 2010 -6.0; 2011 -8.9; 2012 -1.4; 2013 1.3; 2014 1.9.\n  - Private consumption: 2010 -3.6; 2011 -7.2; 2012 -5.7; 2013 -1.1; 2014 0.9; 2015 0.5; 2016 0.4; 2020 0.2.\n  - Gross fixed capital formation: 2010 -14.5; 2011 -17.0; 2012 -6.6; 2013 5.8; 2014 8.5; 2015 8.0; 2016 5.0.\n  - Exports of goods and services: 2010 4.2; 2011 3.2; 2012 5.5; 2013 7.0; 2014 7.5; 2015 6.9.\n  - Imports of goods and services: 2010 -7.0; 2011 -5.1; 2012 2.4; 2013 2.3.\n  - Unemployment rate (percent) (Based on Labor Force Survey): 2010 12.5; 2011 17.3; 2012 19.4; 2013 18.2; 2014 16.8; 2015 15.6; 2016 11.7.\n  - Unit labor costs: 2010 -0.4; 2011 -2.8; 2012 -8.6; 2013 -1.6; 2014 -1.9; 2015 -0.7; 2016 1.7.\n  - Consumer prices (HICP), end of period: 2010 5.1; 2011 0.8; 2012 0.6.\n  - Consumer prices (HICP), period average: 2010 4.7; 2011 -0.5; 2012 2.0.\n  - Current account (percent of GDP): 2010 -10.1; 2011 -9.8; 2012 -7.5; 2013 -5.4; 2014 -3.3.\n  - Export of goods and services (percent of GDP): 2010 20.0; 2011 22.7; 2012 24.8; 2013 25.9; 2014 26.8; 2015 27.7; 2016 28.6; 2020 31.8.\n  - Gross external debt: 2010 179; 2011 192; 2012 193; 2013 200; 2014 184; 2015 141; 2016 (blank); 2020 126.\n  - Public finances (general government, percent of GDP):\n    - Total revenues: 2010 39.5; 2011 41.0; 2012 42.2; 2013 42.1; 2014 40.1.\n    - Total expenditures: 2010 50.1; 2011 50.3; 2012 49.5; 2013 46.8; 2014 44.2; 2015 41.7; 2016 42.0; 2020 41.3.\n    - Primary expenditures: 2010 44.6; 2011 43.4; 2012 43.2; 2013 40.4; 2014 37.6; 2015 35.6; 2016 35.8.\n    - Overall balance: 2010 -10.6; 2011 -9.3; 2012 -7.3; 2013 -4.6; 2014 -2.1; 2015 -1.2.\n    - Primary balance: 2010 -5.0; 2011 -1.0; 2012 4.3.\n    - Gross financing needs (pct of GDP): 2010 24; 2011 29; 2012 73; 2013 23; 2014 21; 2015 17; 2016 11; 2020 9.\n    - Memo: GFN (in billions of Euro): 2010 54; 2011 63; 2012 149; 2013 47; 2014 43; 2015 36; 2016 25.\n    - Memo: Deposit accumulation (in billions of Euro): …; 2011 7.4; 2012 -2.9.\n    - Privatization receipts (percent of GDP): 2010 2.1; 2011 2.6.\n    - Gross debt (in percent of GDP): 2010 145; 2011 165; 2012 163; 2013 167; 2014 161; 2015 153; 2016 117.\n\nPress Release No. 12/85, March 15, 2012.\n\n---\n\n Content in this bundle\n\n- Pr1285apdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Pr1285cpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Pr1285rpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Greece and the IMF\n- Press Releases\n- PRESS CENTER\n- Press Release No. 10/187\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr1285"
    }
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    "Published: March 15, 2012",
    "Approved a four-year SDR 23.8 billion (about €28 billion, or US$36.7 billion) arrangement under the Extended Fund Facility (EFF) for Greece.",
    "Allows immediate disbursement of SDR 1.4 billion (about €1.65 billion, or US$2.2 billion).",
    "The EFF arrangement entails exceptional access to IMF resources, amounting to 2,159 percent of Greece’s quota.",
    "Took note of Greece’s cancellation of the three-year Stand-By Arrangement (SBA) approved in May 2010 (Press Release No. 10/187).",
    "Official sector support for the second Greek program:",
    "Greece has implemented wide-ranging painful measures during a deep recession; fiscal deficit reduced markedly and competitiveness has gradually improved.",
    "Key remaining challenges: a large competitiveness gap, a high level of public debt, and an undercapitalized banking system.",
    "Program focus:",
    "Preconditions and assurances for program success:",
    "Policy priorities highlighted:",
    "Risks:",
    "Since 2009 Greece has been unwinding fiscal and external imbalances through deep recession.",
    "Real GDP declined by more than 13 percent since 2009.",
    "Private investment led the downturn in 2009; public retrenchment started in 2010. By 2011, private consumption became the main driver of the recession.",
    "Competitiveness gains not yet evident economy-wide; current account deficit remained close to 10 percent of GDP.",
    "Productivity growth turned positive only at the end of 2011 as labor market adjustment gathered speed, but unemployment rose rapidly.",
    "Slow adjustment despite deep recession reflects wage and price rigidities and a small tradables sector.",
    "Fiscal deficit improved by about 6 ½ percentage points of GDP between 2009 and 2011 despite steep recession.",
    "Primary deficit in 2011 was 2 ½ percent of GDP, below the long-run debt-stabilizing level of a 1 ½ percent of GDP primary surplus.",
    "Recession and government debt exposure losses left banks undercapitalized, necessitating higher public support.",
    "Program aims: restore competitiveness and growth, attain fiscal sustainability, and secure financial stability.",
    "Emphasis on structural reforms to accelerate economic growth and employment.",
    "Strengthening competitiveness:",
    "Improving the fiscal position:",
    "Restoring financial sector stability:",
    "Reducing debt levels:",
    "Growth in 2012 is expected to be in the range of -4½ to -5 percent, given fiscal adjustment and labor market reforms.",
    "Recovery expected to begin quarter-over-quarter in 2013, with moderate cyclical developments in 2014-2016.",
    "Arrangement and IMF metrics:",
    "Key program targets and fiscal figures:",
    "Selected macro series (percentage changes or levels as shown):",
    "[Pr1285apdf (PDF)](/-/media/websites/imf/imported/external/arabic/np/sec/pr/2012/pr1285apdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[Pr1285cpdf (PDF)](/-/media/websites/imf/imported/external/chinese/np/sec/pr/2012/pr1285cpdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[Pr1285rpdf (PDF)](/-/media/websites/imf/imported/external/russian/np/sec/pr/2012/pr1285rpdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[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)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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