IMF to offer €13 billion in new aid package for Greece
19. February 2012. | 10:53
Source: MIA
The International Monetary Fund is likely to offer minimal funds for a second Greek aid package that is expected to be approved by euro-zone finance ministers Monday, leaving the bloc's governments to provide a much bigger share of the loans than they did in the euro zone's three earlier bailouts, The Wall Street Journal reads.
The International Monetary Fund is likely to offer minimal funds for a second Greek aid package that is expected to be approved by euro-zone finance ministers Monday, leaving the bloc's governments to provide a much bigger share of the loans than they did in the euro zone's three earlier bailouts, The Wall Street Journal reads.
The IMF's smaller contribution reflects fears from the fund's membership that it is becoming overexposed to the euro zone, officials said. But less IMF support heightens the political problems facing some euro-zone governments, which are seeking desperately for ways to minimize the sums they will need to lend to Greece under a new loan package.
The IMF is set to provide just €13 billion ($17.07 billion) of a €130 billion aid package, people familiar with the talks said. That means the euro-zone governments will need to raise nearly €120 billion, far more than its €80 billion contribution to the first Greek bailout in May 2010.
An IMF spokeswoman said the exact size of the fund's contribution for Greece hasn't been determined yet. It will be a topic of discussions between senior euro-zone officials on Sunday and finance ministers on Monday aimed at striking a deal on the second Greek bailout and a restructuring of Greece's debt.after months of negotiations IMF officials are expected to attend Monday's meeting.
The European Central Bank, one of Greece's largest creditors, on Friday completed an exchange of its Greek bonds aimed at protecting the central bank from being forced to write down the value of its bondholdings in the restructuring, which will see Greece's private creditors receive new bonds with half of the value of their existing ones.
The talks on Sunday and Monday are supposed, in part, to clarify how exactly the ECB, national central banks and the euro-zone governments will participate in the restructuring. Their participation in reducing Greece's debt burden will likely be needed to move Greece's debt toward an already-agreed target of 120% of gross domestic product by 2020.
The IMF has already agreed to lend €30 billion to Greece, €22.5 billion to Ireland, and €26 billion to Portugal, many times the quota, or share of those three governments in the IMF. A typical loan arrangement would be about six times a nation's quota.
Greece has received record-breaking support from the fund. The IMF's €30 billion loan program—of which €10 billion has yet to be paid out—amounted to about 24 times the country's quota in the fund.
The IMF contributed 27% to the first Greek bailout of €110 billion and a third of the Irish and Portuguese bailouts. But after euro-zone leaders in July agreed to give Greece a second bailout, officials said that the fund's contribution would be significantly less than a third.
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