The International Monetary Fund (IMF) approved its contribution to the Greek bailout yesterday ( March 15 ). Valuing around EUR 28 billion, the arrangement is part of the EUR 130 billion bailout recently agreed. EUR 1.68 billion is available for immediate disbursement, and the funds will be paid in equal tranches over the next four years.

The money will be paid using the IMF’s Extended Fund Facility, which the IMF describes as entailing “exceptional access to IMF resources.” To give an idea of just how exceptional, the amount to be disbursed is 2,159 percent of Greece’s IMF quota.

“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. The fiscal deficit has been reduced markedly and competitiveness has gradually improved,” said IMF Managing Director Christine Lagarde. However, she went on to say that many difficulties remain, such as a large public debt, competitiveness and undercapitalized banks.

“The new Fund-supported program will enable Greece to address these challenges while remaining in the eurozone. The program focuses on restoring competitiveness and growth, fiscal sustainability, and financial stability,” she said, adding that the commitments made by Greek politicians and the support of the EU as a whole had provided vital assurances for the IMF. The target given by the IMF is a surplus of 4.5 percent of GDP by 2014. Lagarde recognized that the spending cuts will be difficult and painful, of which the Greek government is no doubt acutely aware.

After last minute agreements and tough negotiations the agreement of the new bailout has given Greece some much needed breathing space, but the route ahead will be anything but easy. “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” concluded Christine Lagarde.

Liam Lever, liam@romania-insider.com