IMF agrees to give Greece $4.2 billion

Posted July 08, 2011, at 9:31 p.m.

WASHINGTON — The International Monetary Fund approved on Friday just over $4.2 billion for Greece, the latest installment of a rescue package aimed at helping the country pull back from an impending debt default.

The move by the executive board had been expected after a decision last week by eurozone finance ministers to give Greece their portion of a $17.4 billion loan payment that is part of a $259 billion package agreed to last year.

Friday’s IMF action, with new Managing Director Christine Lagarde in the chair, came as European banks, insurance companies and other financial institutions were trying to get the private sector involved in helping save Greece from default.

The 17 countries that use the euro will continue, with the IMF, to prop up Greece’s struggling economy in the coming years with a second package of aid loans to be completed in September.

Lagarde said the raft of reforms, spending cuts and tax hikes the government has been carrying out as part of conditions to receive bailout funds “is delivering important results: the deficit is being reduced, the economy is rebalancing and competitiveness is gradually improving.”

However, she said, Greek officials still face significant challenges, including meeting a target of getting its burdensome debt down to 7.5 percent of gross domestic product in 2011 and to less than 3 percent by 2014.

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