## IMF Survey: IMF Approves €30 Bln Loan for Greece on Fast Track _IMF News, May 9, 2010_ ## Source details **Canonical URL:** [IMF Survey: IMF Approves €30 Bln Loan for Greece on Fast Track](https://www.imf.org/en/news/articles/2015/09/28/04/53/sonew050910a) ## Other formats - [Markdown version](/en/news/articles/2015/09/28/04/53/sonew050910a/index.md) - [Structured JSON version](/en/news/articles/2015/09/28/04/53/sonew050910a/index.json) - [Bundle manifest](/en/news/articles/2015/09/28/04/53/sonew050910a/bundle-manifest.json) ## Bibliographic details - Published: May 9, 2010 --- ### Approval and purpose - IMF Executive Board approved on May 9, 2010 a €30 billion three-year loan for Greece. - The loan is part of a joint European Union-IMF €110 billion financing package to help Greece ride out the debt crisis, revive growth, and modernize the economy. - The program was approved under front-loaded, fast-track procedures with enabling parliamentary measures approved up-front. ### Financing structure and timing - Combined immediate financial support from the Fund and EU: €20.0 billion available immediately. - Of that immediate support, the program makes about €5.5 billion immediately available to Greece from the Fund as part of joint financing with the European Union. - In 2010, total IMF financing will amount to about €10 billion and will be partnered with about €30.0 billion committed by the EU. - The joint financing is intended to mean Greece will not have to tap international financial markets until 2012. ### Exceptional access and scale - The Stand-By Arrangement is part of the joint €110 billion package (about $145 billion) over three years. - The arrangement entails exceptional access to IMF resources, amounting to more than 3,200 percent of Greece’s quota, and was approved under the Fund's Emergency Financing Mechanism procedures. ### Policy challenges and required reforms - Greece faces a dual challenge: a severe fiscal problem (deficits and public debt that are too high) and a competitiveness problem. - Fiscal consolidation imperatives: - Wages and social benefits constitute 75 percent of total government expenditure, implying reductions in public wage and pension bills. - The government must reduce the fiscal deficit and place the debt-to-GDP ratio on a downward trajectory. - Competitiveness and structural reform imperatives: - Implement pro-growth policies and reforms to modernize the economy and open opportunities. - Reduce inflation below the euro area average, including by keeping wages and labor costs flat to regain price competitiveness. ### Rationale against debt restructuring - Debt restructuring was argued to create more problems than it could solve; default could make things worse. - Key points made against restructuring: - Restructuring would not help Greece’s capacity to grow; fiscal and structural reforms in the Government’s program are designed to bring down costs, make the labor market more flexible, and improve the business and investment climate. - The complexity of economic and political inter-linkages, including wide holdings of Greek bonds by private investors and public entities, complicates alternatives and raises contagion risks. - Most adjustment is needed to eliminate Greece’s large primary deficit (the deficit net of interest payments); this is the main issue, not the level of debt. - The government will pursue prudent debt management and update tools to ensure adequate risk management. ### Program conditionality and social protection - Conditionality is characterized as well targeted and focused on correcting Greece's key imbalances: high debt and lack of competitiveness. - The IMF emphasized strong ownership and leadership by the Greek authorities; it is their program. - The program includes measures to protect the most vulnerable, a critical component for effective implementation. ### Financial sector measures and stability - The program aims to safeguard financial sector stability. - As the banking system undergoes a period of deflation expected to impact profitability and bank balance sheets, a Financial Stability Fund (FSF) will be established to expand the safety net for dealing with solvency pressures. ### Macroeconomic outlook and scenarios - Real GDP growth is expected to contract sharply in 2010–2011, and recover thereafter. - Unemployment is expected to peak at nearly 15 percent of GDP by 2012. - The frontloaded fiscal adjustment in 2010-11 will suppress domestic demand in the short run. - From 2012 onward, improved market confidence, a return to credit markets, and comprehensive structural reforms are expected to lead to a rebound in growth. - Inflation is expected to remain below the euro average; price adjustment is expected to come from domestic demand tightening, fiscal adjustment, moderation of public wages and pensions, and moderation of private sector wages due to demonstration effects. *Source: IMF Survey online, May 9, 2010 — IMF Approves €30 Billion Three-Year Loan for Greece as part of a €110 Billion Joint EU-IMF Package.* --- ## Content in this bundle - [New050910aapdf (PDF)](/-/media/websites/imf/imported/external/arabic/pubs/ft/survey/so/2010/new050910aapdf.pdf){rel="external" type="application/pdf"} - [New050910acpdf (PDF)](/-/media/websites/imf/imported/external/chinese/pubs/ft/survey/so/2010/new050910acpdf.pdf){rel="external" type="application/pdf"} - [New050910afpdf (PDF)](/-/media/websites/imf/imported/external/french/pubs/ft/survey/so/2010/new050910afpdf.pdf){rel="external" type="application/pdf"} - [New050910aspdf (PDF)](/-/media/websites/imf/imported/external/spanish/pubs/ft/survey/so/2010/new050910aspdf.pdf){rel="external" type="application/pdf"} --- ## References - [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus) - [PRESS CENTER](http://presscenter.imf.org/) - [In The News](https://www.imf.org/en/news/search) - [IMF Country Focus](https://www.imf.org/en/news/country-focus) - [Press release](https://www.imf.org/external/np/sec/pr/2010/pr10187.htm) - [Greece fast facts](https://www.imf.org/external/np/exr/countryfacts/grc/index.htm) - [Agreement with Greece](https://www.imf.org/external/pubs/ft/survey/so/2010/CAR050210A.htm) - [IMF and Greece](https://www.imf.org/external/country/GRC/index.htm) - [Greece: key links](http://blog-imfdirect.imf.org/2010/05/02/key-links-for-the-greek-financing-package/) - [Greece Q&As](http://www.imf.org/external/np/exr/faq/greecefaqs.htm) - [Conditionality](https://www.imf.org/external/np/exr/facts/conditio.htm) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sonew050910a_