Finland Times

The International Monetary Fund (IMF) has approved disbursement of 3.24 billion Euro for Greece under a program supported by a four-year Extended Fund Facility (EFF) arrangement, said an IMF press release.

The executive board of the IMF on Wednesday completed the first and second reviews of Greece’s economic performance and also approved waivers of applicability of end-December 2012 performance criteria, modified performance criteria, and rephased disbursements under the arrangement.

The fiscal adjustment path was lengthened by two years to 2016 to give Greece more time to reach the primary balance target, privatization targets were adjusted downwards to reflect weak market conditions, and the authorities specified the adjustment measures necessary to close the fiscal gap through 2014.

The lender authorities took measures to liberalize product markets and advance bank recapitalization. The Greek government also reached understandings with its European partners on a revised financing framework, including steps to ease its debt burden.

The EFF arrangement, which was approved on March 15, 2012 is part of a joint package of financing with euro area member states amounting to €172 billion over four years. It entails exceptional access to IMF resources, amounting to about 2,159 percent of Greece’s quota.

 “The program is moving in the right direction, with strong fiscal adjustment and notable labor-cost competitiveness gains………,´´ said Ms. Christine Lagarde, IMF Managing Director and Executive Board Chair after the meeting.

The IMF MD said that Greece has made progress with structural reforms, reflected in recent actions to reduce non-wage labor costs and reform the product market. However, much more remains to be done to achieve the critical mass of reforms needed to boost productivity and lower prices.

“Efforts must continue to restructure and strengthen the banking system. With the finalization of the bank recapitalization framework, it is vital that the new monitoring and supervisory framework be made effective to protect the public interest and prevent state interference in management,´´ the IMF boss added.