IMF approves 28-bln-euro rescue loan for Greece

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The International Monetary Fund ( IMF) announced on Thursday that it has approved a 28-billion-euro rescue loan for Greece, ending months of market jitters caused by Greece's faltering fiscal and economic situations.

The International Monetary Fund announced that it has approved a 28-billion-euro rescue loan for Greece. [File photo]

The IMF executive board approved a four-year loan arrangement under the Extended Fund Facility (EFF) for Greece in the amount of special drawing right (SDR) 23.8 billion, or 28 billion euros, in support of Greek authorities' economic adjustment program, the IMF said in a statement.

The approval allows for an immediate disbursement of SDR 1.4 billion (about 1.65 billion euros) to the cash-strapped country, said the Washington-based global lender.

The IMF also canceled the three-year Stand-By Arrangement (SBA) with Greece which had been approved in May 2010 to make way for the new program.

"The IMF contribution of 28 billion euros will be disbursed in equal tranches over a four-year period," added the statement.

With the completion of the recent private sector involvement ( PSI) plan for the voluntary write-off of about 100 billion euros from the Greek debt loaned by private creditors, Greece has secured the release of a new 130-billion-euro EU-IMF aid package, the second one granted to the country since May 2010.

IMF Managing Director Christine Lagarde praised the economic reform efforts made by the eurozone country, saying that "Greece has made tremendous efforts to implement wide-ranging painful measures over the past two years, in the midst of a deep economic recession and a difficult social environment."

"The fiscal deficit has been reduced markedly and competitiveness has gradually improved. However, the challenges confronting Greece remain significant, with a large competitiveness gap, a high level of public debt, and an undercapitalized banking system," Lagarde added.

"Greece's priority is to undertake competitiveness-enhancing structural reforms. The government's bold labor market measures will play a crucial role in this regard, complemented by measures to liberalize professions and product markets, improve the business environment, and privatize state-owned assets," she added.