New loan deal submitted to Parliament as IMF meets

Greece's new loan agreement with the eurozone and the International Monetary Fund was submitted to Parliament for approval a few hours before the International Monetary Fund was due to meet to clear its participation in the bailout.

It was tabled in Parliament's economic affairs committee on Thursday as urgent legislation.

The Cabinet approved on Wednesday the loan agreement with the European Financial Stability Fund (EFSF), which will be worth 109.1 billion euros, although the total amount of loans Greece will receive is 164.4 billion euros.

Interim Prime Minister Lucas Papademos told his ministers that the coalition government “is nearing the end of its major and multifaceted effort to ensure the country’s funding over the next few years.”

Greece is expected to receive almost 77 billion euros over the next few months from the eurozone and the IMF. This includes 30 billion euros toward the issue of EFSF-backed bonds that will go to bondholders who took part in the debt swap.

Another 5.7 billion euros will be used to pay off interest on bonds included in the swap, while 25 billion will be used to recapitalize Greek banks. Greece is due to receive another 23.8 billion euros for this purpose later this year. Another 5.9 billion euros will be used to pay bonds held by the European Central Bank.

Also on Thursday, the International Monetary Fund’s executive board was expected to approve Managing Director Christine Lagarde’s recommendation of 28 billion euros in financial aid to help support Greece’s economic program over the next four years. The 28 billion euro figure includes 9.7 billion euros that remained from a previous aid package. The aid is expected to be delivered over a period of four years.

Meanwhile, Finance Minister Evangelos Venizelos was scheduled to hold a press conference on Thursday afternoon. The Financial Minister has already announced that he plans to step down from his position after the PASOK leadership electon scheduled to be held on Sunday. He is the sole candidate for the position.

Also on Thursday, the head of the EU Task Force for Greece, Horst Reichenbach, was also expected to render a report on Greece at a separate press conference.

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