The International Monetary Fund has put up nearly $40 billion to help bail out Greece and appease investors' fears of a spreading European debt crisis.
The IMF's executive board met in Washington on Sunday to approve a three-year, $40-billion loan for the debt-plagued nation, part of a $140-billion package negotiated with other eurozone countries.
With hundreds of billions in debts and a budget deficit of 13.6 per cent of gross domestic product, Greece was just weeks away from default when eurozone finance ministers agreed to a rescue.
Greece has enacted tax hikes and deep cuts in government spending as a condition of the bailout. The austerity measures have sparked riots and social unrest in the nation in recent days.
"The Greek government should be commended for committing to an historic course of action that will give this proud nation a chance of rising above its current troubles and securing a better future for the Greek people," IMF managing director Dominique Strauss-Kahn said in a statement Sunday.
"Today's strong action by the IMF to support Greece will contribute to the broad international effort underway to help bring stability to the euro area and secure recovery in the global economy," Strauss-Kahn said.
On Saturday, eurozone leaders approved a $100 billion package of loans to help keep Greece from imploding. Greece will have immediate access to $25.7 billion from the IMF and EU bailouts, and will be able to tap a total of about $51.5 billion this year. Athens needed to see the first instalment of funds before May 19, when billions in 10-year bonds come due.
Offers 2-year reprieve
Together, the bailouts give Greece enough money to avoid having to raise private funds for two years, IMF officials said. By that time, it is hoped Greece will be strong enough economically to borrow through private debt markets, IMF deputy managing director John Lipsky said in a phone call with reporters Sunday.
Eurozone ministers also are meeting Sunday to consider other measures aimed at stabilizing global markets that were rocked last week by fears that Greece's debt crisis will spread to other EU nations, such as Portugal and Spain, and hobble the global economic recovery. They want to have a plan in place before Asian markets open for the week.
Earlier attempts to stabilize the Greek economy failed to reassure jittery investors, Lipsky said. He said Sunday's action sends a signal that "the international community is willing to do whatever it takes to help Greece's government overcome the severe challenges it's facing."
U.S. President Barack Obama continued pressing European leaders to craft a solution robust enough to stabilize markets after volatility last week that rivalled market swings during the peak of the 2008 financial crisis.
Obama called German Chancellor Angela Merkel and French President Nicolas Sarkozy on Sunday to discuss the importance of European Union nations "taking resolute steps to build confidence in the markets," said White House press secretary Robert Gibbs.