IMF approves 28 bln-euro bailout for Greece
15 Mar, 2012 17:55
The International Monetery Fund has approved a four-year, 28 billion-euro bailout for Greece, part of a bigger rescue package which is hoped to save the country from a possible default that had been predicted for the end of March.
In a brief statement, the IMF said it would immediately disburse 1.65 billion euros to Athens, following the deal to help keep Greece stay solvent until 2014. Athens will use the approved funds to make debt repayments later in the month. The IMF’s approval comes after eurozone countries on March 12 formally approved their share of an initial 130 billion-euro rescue package. Greece secured the IMF-EU package after it completed a government bond swap deal with private investors in a debt exchange, swapping $232.5 billion in privately-held bonds for new ones worth less than half their original value. The arrangement imposed losses as high as 74per cent on private bondholders.Also last week the eurozone ministers released up to 35.5 billion ($47 billion) euro in bailout money to fund the debt swap. Investors exchanging bonds were to receive up to 30 billion euro, or 15 per cent of the remaining money they are owed, as a sweetener for the deal and 5.5 billion euro for outstanding interest payments.The release of funds signaled that eurozone ministers believed Greece has met the terms of its 172 billion-euro bailout package. Following the bond swap deal, the Fitch ratings agency upgraded Greece's credit rating to a B-, assigning it a “stable outlook” status.However, in a statement, experts from Fitch said that a substantial risk of default of the country remains, urging the government to push for further reform.Greece expects to get the agreed 172.7 billion-euro saving package by the end of 2015. The full package will include the second bailout agreed this year, additional funds from the IMF, and funds left over from its first bailout agreed in 2010. Greece said it has 34.5 billion euros left over from its first bailout.