IMF approves second rescue loan for Greece

US: The International Monetary Fund on Thursday approved a second rescue loan for debt-riddled Greece, joining the European Union again in an attempt to save the country from bankruptcy.

The IMF executive board authorized a four-year, 28 billion euro ($36.7 billion) loan for Greece "in support of the authorities' economic adjustment program," the global lender announced.

"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," IMF managing director Christine Lagarde said in a statement.

"However, the challenges confronting Greece remain significant, with a large competitiveness gap, a high level of public debt, and an undercapitalized banking system." The new Fund-supported program "will enable Greece to address these challenges while remaining in the eurozone," Lagarde said.

The IMF loan approval came days after eurozone ministers signed off on their part of a huge 237 billion euro rescue plan for Greece, that combines 130 billion euros in new financing and 107 billion euros of debt reduction by the private sector.

The Fund made a first installment of 1.65 billion euros available immediately, with other tranches dependent on Athens's progress in hitting economic benchmarks.

The economic outlook was worse than previously believed, the IMF said.

The Greek economy was expected to exit recession only in 2014, not 2013 as forecast in December. But with gross domestic product growth in the low digits beginning in 2014, Greece's public debt would be on track to meet the loan program's debt-to-GDP benchmark of below 120 percent by 2020.

The IMF projected debt would fall from 163 percent this year to 117 percent in 2020.

Lagarde highlighted that the Greek authorities were "fully committed" to the program objectives and "stand ready to take any additional measures as may be necessary." "Greece's priority is to undertake competitiveness-enhancing structural reforms," she said.

But, Lagarde warned, "risks to the program remain exceptionally high, and there is no room for slippages.

"Full and timely implementation of the planned adjustment -- alongside broad-based public support and support from Greece's European partners -- will be critical to success."

The IMF mission chief to Greece, Poul Thomsen, said the structural reforms Athens needs to take will be "undoubtedly socially and politically challenging." But with the support of the IMF, the EU and private creditors, he said, Greece can overcome its debt problems and get its economy on the recovery track."This is doable," he told reporters.

The loan approval had been expected, despite some misgivings among members over the Fund pouring more money into troubled Greece and Europe, and worries that Greece's fractious politics might impede progress in restructuring its finances.

AFP