FACTBOX-Terms of euro zone emergency loans to Greece

April 16 (BestGrowthStock) – Euro zone finance ministers agreed last
Sunday to the terms of emergency loans for Greece, should the
debt-stricken country be unable to finance itself on the market.
Below are the key points of the agreement.

WHO WOULD LEND TO GREECE?

All countries using the euro and the International Monetary
Fund. Euro zone member states would contribute to the loans
according to their respective holdings in the European Central
Bank capital. For a detailed breakdown see:
(http://www.ecb.int/ecb/orga/capital/html/index.en.html)

BURDEN SHARING IN LOANS

The euro zone would provide two-thirds of all loans
requested by Greece and the IMF would supply the remaining
one-third.

LENGTH OF STAND-BY LOAN PROGRAM

Three years

THE AMOUNT

30 billion euros from the euro zone in the first year. The
IMF could lend Greece up to 10-to-12 times its IMF quota of
$1.25 billion, which would mean $12.5 billion to $15 billion
(some 11.1 billion euros). A senior Greek finance ministry
official said he would expect the IMF to lend Greece at least 10
billion euros in 2010. The official also said that it was
logical to expect the package would amount to significantly more
than 40 billion euros over three years. Earlier, he had said it
could hit 80 billion euros, but later corrected that point.

Euro zone officials dismissed as a “misunderstanding” a
remark by a German government spokesman earlier this week that
the 30 billion would be for three years, rather than just for
the first year. For the full text of the Eurogroup agreement,
signed also by Germany, see: [ID:nLDE63A0GE]

Some economists have expressed concern however, that while
the agreement dealt with the near-term effectively, it did not
address longer term problems with Greek finances and did not
spell out amounts available in 2011 and 2012.

INTEREST

For the euro zone, variable rate loans would be made on the
basis of three-month EURIBOR rates, while fixed-rate loans will
be based upon the rates corresponding to EURIBOR swap rates for
the relevant maturities.

On top of that, there will be a charge of 300 basis points.
An additional 100 basis points will be charged for loans longer
than three years. In conformity with IMF charges, a one-time
service fee of maximum 50 basis points will be charged to cover
operational costs.

The statement said that for a three-year loan to Greece as
of April 9, the interest would be “around five percent.”

The IMF prices its loans less, Economic and Monetary Affairs
Commissioner Olli Rehn said.

HOW TO GET IT

Greece has to request the money, because it is unable to
finance itself on the market. The ECB and the European
Commission then assess if this is really the case. A unanimous
decision of euro zone countries is the final go-ahead. It is
unclear if that must be the heads of state and government or
just finance ministers, although in either case a teleconference
could be organised quickly.

The ECB pays out the money while the Commission acts as a
coordinator of the bilateral loans.

In a step toward obtaining billions of euros in emergency
loans, Greece asked on Thursday for official talks with European
authorities and the International Monetary Fund on “a multi-year
programme of economic policies.”

Greece said this “could be supported with financial
assistance from the euro-area member states and the IMF, if the
Greek authorities were to decide to request such assistance.”

Such talks clear a further hurdle for a quick pay-out of the
cash, should Athens request it.

CONDITIONALITY

The loans to Greece are supposed to be linked to conditions,
but euro zone sources said Greece would not be asked to make
deeper cuts in its budget deficit this year than it has already
promised. Athens plans to reduce the gap to 8.7 percent from
12.7 percent in 2009.

Any extra conditions that could be attached to the loans
would more likely be linked to more structural or administrative
reforms or streamlining the flow of statistics information, euro
zone source said.

The IMF would not impose any new conditions on Greece
because the current programme is already more ambitious than the
IMF would have asked for, a euro zone source said.

HOW LONG BETWEEN REQUEST AND PAYOUT

The bilateral loans have to get parliamentary approval, but
national governments have put the issue on an accelerated path
through parliamentary economic committees so “it would be a
matter of days” from the moment of request to payout, a euro
zone source close to the talks said.

The IMF has no need for parliamentary approval, so the
disbursement of the funds from the IMF could be much faster.

OBSTACLES

A German economist has said he would challenge legally the
constitutionality of the aid scheme, but the euro zone source
said that the German government has assured the Eurogroup that
according to their legal research there was no danger of losing
the case. The challenge would not delay the payout of the aid,
should it be requested.
Stock Market Money

(Reporting by Jan Strupczewski, editing by Maureen Bavdek and
Toby Chopra)

FACTBOX-Terms of euro zone emergency loans to Greece