April 23 Greece asked for emergency loans from
the euro zone and the International Monetary Fund on Friday.
Below are the key points of an agreement between euro zone
finance ministers from mid-April on the terms of such loans, if
Athens is unable to finance its large debts in the market.
WHO WOULD LEND TO GREECE?
All countries using the euro single currency and the
International Monetary Fund. Euro zone member states would
contribute to the loans according to their respective holdings
in the European Central Bank capital. For a detailed breakdown
BURDEN-SHARING IN LOANS
The euro zone would provide two-thirds of all loans
requested by Greece and the IMF would supply the remainder.
LENGTH OF STAND-BY LOAN PROGRAMME
30 billion euros from the euro zone in the first year. The
amounts for 2011 and 2012 have not been decided yet because it
is impossible at this stage to determine how much Greece could
need in those years, the European Commission has said.
But the uncertainty about the total funds available weigh on
The IMF has not said how much it could lend Greece, but
sources said it could be up to 10-to-12 times its IMF quota of
$1.25 billion, which would mean $12.5 billion to $15 billion
(some 11.1 billion euros).
A senior Greek finance ministry official has said he would
expect the IMF to lend Greece at least 10 billion euros in 2010.
The official also said it was logical to expect the package
would amount to significantly more than 40 billion euros over
three years. Earlier, he had said it could hit 80 billion euros,
but later corrected that point.
For the full text of the Eurogroup agreement see:
Some economists are concerned that while the agreement deals
with the near-term effectively, it does not address longer-term
problems with Greek finances.
For the euro zone, variable rate loans would be made on the
basis of three-month EURIBOR rates, while fixed-rate loans will
be based upon the rates corresponding to EURIBOR swap rates for
the relevant maturities.
On top of that, there will be a charge of 300 basis points.
An additional 100 basis points will be charged for loans longer
than three years. In conformity with IMF charges, a one-time
service fee of a maximum 50 basis points will be charged to
cover operational costs.
The euro zone statement said that, as of April 9,r a
three-year loan to Greece would have an interest rate of "around
The interest on IMF loans is smaller than on the euro zone
loans, Economic and Monetary Affairs Commissioner Olli Rehn has
HOW TO GET IT
Greece has requested the money on April 23, because it
believes it is unable to finance itself on the market.
The ECB and the European Commission will not assess if this
is really the case. A unanimous decision of euro zone countries
is the final go-ahead.
It is unclear if that must be the heads of state and
government or just finance ministers, although in either case a
teleconference could be organised quickly.
The ECB pays out the money while the Commission acts as a
coordinator of the bilateral loans.
Greece is now in talks with the ECB, the Commission and the
IMF on what it needs to do to get loans in 2011 and 2012.
The loans to Greece are supposed to be linked to conditions,
but euro zone sources said Greece would not be asked to make
deeper cuts in its budget deficit this year than it has already
Athens plans to reduce its deficit by 4 percentage points in
2010. On April 22, the EU's statistics office revised up the
Greek deficit for 2009 to between 13.6 percent and 14.1 percent
The European Commission said after the revision that Greek
deficit-cutting efforts will have to be intensified in 2011 and
2012 and clearly spelled out.
The IMF is unlikely to impose any new conditions on Greece
for this year because the current programme is already more
ambitious than the IMF would have asked for, euro zone sources
HOW LONG BETWEEN REQUEST AND PAYOUT
In the case of many countries it should be a matter of days,
rather than hours or weeks, euro zone officials say. Greece
expects to get the funds before May 19, when it has to refinance
8.5 billion euros worth of debt.
The bilateral loans have to get parliamentary approval, but
many national governments have put the issue on an accelerated
path through parliamentary economic committees.
The IMF has no need for parliamentary approval, so the
disbursement of the funds from the IMF could be much faster.
The aid is likely to face a legal challenge in Germany but a
euro zone source said that the German government has assured the
Eurogroup that according to their legal research there was no
danger of losing the case.
(Reporting by Jan Strupczewski, editing by Luke Baker and